Wholesale prices were flat in June, after increasing 0.3% in May and declining 0.3% in April, according to data released by the U.S Bureau of Labor Statistics on Wednesday.
Many economists had expected the Producer Price Index (PPI), which measures changes in the prices of goods and services, to show an increase of 0.2% in June. The bureau’s Consumer Price Index, a popular inflation gauge, was released on Tuesday and showed an overall increase of 0.3% for last month.
But instead, the PPI surprised on the downside, showing no change in June. The conflicting data suggests that President Donald Trump’s tariffs on imported goods have so far had little impact on the nation’s inflation rate. The results are expected to increase the pressure on Federal Reserve Chair Jerome Powell to lower interest rates when Fed officials meet at the end of July.
On an unadjusted basis, the index for final demand of goods and services rose 2.3% for the 12 months ending in June. In May, year-over-year final demand prices were up 2.7%. The 12-month index for final demand, less volatile food, energy and trade services prices, advanced 2.5%.
While the PPI showed that headline and core wholesale inflation were both flat in June, prices for final demand goods rose 0.3%, the largest jump since February when prices also rose 0.3%. Prices for communication and related equipment increased by 0.8%, while energy costs, which includes gasoline and residential electric power, were up 0.6%. Prices for poultry and other meats also increased. Overall food prices rose 0.2% in June.
The indexes for machinery, equipment, parts and supplies wholesaling; furniture retailing; and apparel, jewelry, footwear and accessories also rose. At the same time, chicken eggs dropped 21.8% month over month. Natural gas liquids and plastic materials also declined in price.
Prices for final demand services dropped by 0.1% last month after increasing by 0.4% in May. Travel accommodation services fell by 4.1% and accounted for more than half of the June decline in service prices.
Final demand for transportation and warehousing services decreased by 0.9%. Other services falling in price included automobiles and auto parts retailing, airline passenger services and food and alcohol wholesaling.
Despite the calm inflation picture, Fed officials say they continue to be cautious about rate cuts and CNBC reports that the financial markets are giving virtually no chance for an interest rate cut at the Fed’s meeting on July 30. Most economists are now looking for a possible rate cut during the Fed’s September gathering.
