Economists surveyed by Bloomberg News had expected the June PPI index to rise 1.4%. Producer prices increased 1.4% in May and 0.2% in April.
The core rate, which excludes food and energy costs, increased 0.2%, the Labor Department said, below the Bloomberg News 0.3% consensus estimate.
Economist Peter Dawson told BloggingStocks Tuesday the June PPI is another unfortunate data point for the economy, but it's not as bad as it appears. "The report is bad, but not as bad as it could have been. Energy really drove the index higher. If you took out gasoline prices, PPI would be down a half percentage point," Dawson said. "That said, energy prices are still rising at an alarming rate and they're a cost concern for businesses and individuals alike."
For the past 12 months, producer prices have increased 9.2% and the core rate has risen 3.0%.
Also, the core intermediate PPI -- a benchmark, leading indicator of inflation and one the U.S. Federal Reserve monitors closely -- increased 2.1% in June.
In June, gasoline prices zoomed 4.6%, diesel rose 6.7%, and natural gas increased 6.6%, consumer goods increased 1.5%, durable manufactured goods rose 1.7%, and food prices rose 0.2%.
Economic Analysis: As economist Dawson noted, another high PPI report in June driven higher by energy prices. Clearly, to get a handle on inflation, energy price increases have to slow, or even decline. But that is a difficult task for the U.S. given that the price of the most important energy commodity, oil, is set in the global marketplace. An alternate adjustment to lower energy prices? Increase energy efficiency in vehicles, businesses and homes.
Comfort Zone Investing: It's the revenues that count
Black Friday busy, but momentum may not hold
Six Thanksgiving trades for tasty profits
Reader Comments (Page 1 of 1)
7-15-2008 @ 5:38PM
nolan said...
we need a wholesale removal of everyone in washington ..........they all have forgotten why they are there...this country was founded on total distain of their leaders ..maybe its time to start over again