US PPI data stayed unchanged in June, marking a surprising pause in inflation after a 0.3% rise in May.
The latest Producer Price Index (PPI) data from the Bureau of Labor Statistics came in softer than expected, with economists forecasting a 0.2% uptick.
The flat reading adds a bit of complexity to the broader inflation narrative, suggesting some cooling at the wholesale level.
On a year-over-year basis, PPI rose 2.3%, while the core measure, which excludes volatile food, energy, and trade services, was also unchanged for the month, rising 2.5% from the previous year.
This apparent moderation in wholesale inflation provides a moment of clarity for markets and policymakers amid a year marked by economic crosswinds and monetary uncertainty.
PPI data: Opposing forces offset each other
The steady wholesale prices in June were the result of opposing forces; rising costs for goods were offset by falling prices for services.
Goods prices climbed 0.3% during the month, driven by energy and core items like communication equipment and industrial materials.
Energy costs rose 0.6%, with gasoline and electricity leading the way, while food prices inched up 0.2%.
There was still plenty of volatility within categories, egg prices tumbled more than 21%, but meats and poultry posted solid gains, yet overall food inflation stayed relatively contained.
Service prices dipped a bit in June, slipping 0.1% after a bigger jump the month before.
A big part of that drop came from cheaper hotel stays, with accommodation prices falling by over 4%.
There were also price declines in things like car sales, flights, and alcohol distribution.
But it wasn’t all down as some areas, like financial services and retail sales of equipment and clothing, actually saw prices go up.
It’s a mixed bag overall, showing that demand is still pretty uneven depending on the industry.
June’s CPI inflation
June’s numbers highlight a growing split in inflation trends across the economy. Goods prices are mostly stable or ticking up, thanks to improving supply chains and rising commodity costs.
But on the services side, inflation seems to be losing steam. That slowdown could play a big role in how the Federal Reserve approaches interest rates moving forward.
With the Fed emphasizing a data-driven strategy, this softer PPI report may give policymakers some breathing room, especially as consumer inflation also shows signs of easing.
The Consumer Price Index for June rose 0.3% from the previous month and 2.7% over the year, not quite at the Fed’s 2% target, but clearly headed in the right direction.
Markets took the softer PPI report in stride. Stocks inched up as investors saw a bit more room for the Fed to ease off on rate hikes, while Treasury yields stayed mostly flat, reflecting lingering caution about inflation’s staying power.
The dollar dipped slightly against other major currencies, hinting at growing bets that the Fed might take a more patient approach if inflation keeps cooling through the summer.
Globally, the picture is even more complicated. While US wholesale prices held steady, China’s producer prices kept falling, pointing to shifts in global supply chains and different demand patterns across economies.
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