WASHINGTON – Prices charged by U.S. producers rose in June at the fastest pace in 13 months, reflecting a big jump in the price of gasoline and other energy products.
The Labor Department says that its producer price index, which measures cost pressures before they reach the consumer, increased 0.5 per cent in June. That was the largest one-month jump since a similar rise in May 2015.
Energy prices were up 4.1 per cent last month while food costs rose 0.9 per cent.
Core inflation, which excludes volatile food and energy, rose 0.4 per cent in June, the biggest uptick since January. Even with the June acceleration, producer prices are up just 0.3 per cent over the past 12 months, while core inflation is up a moderate 1.3 per cent.
Those increases are similar to the moderate inflation being registered at the consumer level. A gauge of consumer prices preferred by the Federal Reserve has stayed below the Fed’s 2 per cent target for more than four years. The central bank boosted a key interest rate by a quarter point in December and signalled that it planned to raise rates another four times this year.
But a weak start for the U.S. economy this year and financial market turbulence stemming from global weakness has so far kept the Fed on the sidelines. With inflation still at low levels, analysts believe the Fed will leave rates unchanged for a fifth time this year when officials next meet at the end of this month. Many analysts believe the Fed will raise rates only once or twice this year, with the first rate increase not coming until September at the earliest.
For June, the 4.1 per cent rise in energy costs reflected a 9.9 per cent jump in the price of gasoline, the biggest increase since a 17.7 per cent rise in May 2015.
The 0.9 per cent increase in food costs was the largest since a similar rise in January. The price of corn rose 10.7 per cent in June, the sharpest jump since August 2012, while meat prices were up 4 per cent.