FILE - Excavator booms, adorned with the Caterpillar Inc. "CAT" logo, are displayed at the Milton CAT dealership in Londonderry, N.H., Feb. 20, 2020. On Friday, July 12, 2024, the Labor Department releases producer prices data for June, 2024. (AP Photo/Charles Krupa, File)
WASHINGTON (AP) – Wholesale prices in the United States rose by a larger-than-expected 2.6% last month from a year earlier, a sign that some inflation pressures remain high.
The increase, the sharpest year-over-year increase since March 2023, comes at a time when other price indicators are showing that inflation has continued to ease.
The Labor Department said Friday that its producer price index – which tracks inflation before it reaches consumers – rose 0.2% from May to June after being unchanged the month before. Excluding food and energy prices, which tend to bounce around from month to month, so-called core wholesale prices were up 0.4% from May and 3% from June 2023.
The producer price index can provide an early sign of where consumer inflation is headed. Economists also watch it because some of its components, notably healthcare and financial services, flow into the Federal Reserve’s preferred inflation gauge – the personal consumption expenditures, or PCE, index.
Friday’s wholesale figures follow the government’s report Thursday that consumer inflation cooled in June for a third straight month. Consumer prices declined 0.1% from May to June – the first such drop in overall inflation since May 2020, when the economy was paralyzed by the pandemic.
As a whole, this week’s price figures, along with other recent data, still suggest a continued slowdown in the inflation that first gripped the nation three years ago, when the economy rocketed out of the pandemic recession, leaving deep supply shortages and sending prices soaring.
The Fed raised its benchmark interest rate 11 times in 2022 and 2023, to a 23-year high, to try to curb the price spikes. Inflation has since cooled from its four-decade high of 9.1%, and the central bank is widely expected to begin cutting interest rates in September.
Rate cuts by the Fed would likely lead, over time, to lower borrowing costs for mortgages, auto loans and credit cards as well as business borrowing, and could also boost stock prices.
