Companies and Brands
Tame Producer Price Inflation, But First Uptick In Months
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The Labor Department’s report on wholesale inflation remains muted. The Producer Price Index for the month of June was up by +0.1% and the core-rate which excludes food and energy was up by +0.2%. Dow Jones was calling for -0.3% on the headline and +0.2% on the core rate; Bloomberg had estimates of -0.4% on the headline rate and +0.2% on the core rate. The readings for May were -1.0% on the headline and +0.2% on the core rate.
While this is still low in inflation, the gains were the first in four months. Food prices and truck prices contributed to those gains. The annual rate was 0.7% for producers, but the core rate on an annualized basis was up 2.6%. As a reminder, the FOMC has an inflation target of roughly 2.0%.
Food prices rose 0.5% in June. It is also worth noting that crude goods or raw materials were down by 3.6% and that implies that prices may remain muted in the coming months as long as the recent rise in drought-related prices does not get out of hand.
JON C. OGG
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