After yesterday’s report showing U.S. consumer prices rose in line with estimates, the Labor Department released a separate report on Thursday showing U.S. producer prices increased more than expected in the month of July.

The Labor Department said its producer price index for final demand surged up by 1.0 percent in July, matching the jump seen in the previous month. Economists had expected producer prices to climb by 0.6 percent.

With the bigger than expected monthly increase, the annual rate of growth in producer prices accelerated to 7.8 percent in July from 7.3 percent in June.

The year-over-year spike in producer prices reflected the largest advance since 12-month data were first calculated in November 2010.

The Labor Department said nearly three-fourths of the July increase in producer prices can be traced to a 1.1 percent jump in prices for final demand services.

The report also showed energy prices shot up by 2.6 percent during the month, while food prices tumbled by 2.6 percent.

Excluding prices for food, energy and trade services, core producer prices advanced by 0.9 percent in July after rising by 0.5 percent in June. Core prices were expected to show another 0.5 percent increase.

The annual rate of growth in core prices accelerated to 6.1 percent in July from 5.5 percent in June, showing the biggest increase since 12-month data were first calculated in August 2014.

The report showed prices for transportation and warehousing services spiked by 2.7 percent in July after climbing by 0.9 percent in June.

“We expect the July report to mark the peak of producer price inflation as supply pressures gradually unwind in the coming months and demand moderates from its blistering pace in the first half of the year,” said Mahir Rasheed, U.S. Economist at Oxford Economics.

He added, “However, stubborn pandemic disruptions will continue to hamper supply through year-end, keeping producer prices sticky and prompting the Fed to begin QE tapering in early 2022.”

On Wednesday, the Labor Department released a separate report showing U.S. consumer prices increased in line with economist estimates in the month of July.

The Labor Department said its consumer price index climbed by 0.5 percent in July after jumping by 0.9 percent in June.

The increase in consumer prices, which came following the biggest jump in thirteen years in the previous month, matched economist estimates.

Compared to the same month a year ago, consumer prices in July were up by 5.4 percent, unchanged from the annual rate of growth seen in June. The pace of growth was expected to dip to 5.3 percent.

Excluding higher food and energy prices, core consumer prices rose by 0.3 percent in July after surging by 0.9 percent in June. Economists had expected core prices to increase by 0.4 percent.

The annual rate of growth in core prices slowed to 4.3 percent in July from 4.5 percent in June, matching economist estimates.


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