US producer inflation higher than anticipated in June
US wholesale prices picked up more than expected in June due to service costs, the government reported on Friday. The producer price index (PPI) rose by 0.2 percent last month, while an initially-reported decline in May was revised upwards, said the Labour Department. The figures come after a cooler than expected consumer inflation reading, which fanned hopes of the US central bank cutting interest rates as soon as September. The Federal Reserve has been battling to bring stubborn inflation back to its longer-term two percent target by keeping rates high, and Fed Chair Jerome Powell has noted "modest" progress on prices recently. On Thursday, government data showed the consumer price index – a key gauge of inflation – rose 3.0 percent from a year ago, a slowdown from 3.3 percent in May. Analysts said the latest PPI data is unlikely to worry the Fed. In the PPI report, a 0.6 percent increase in services costs bumped the overall index higher, the Labour Department said. From a year ago, PPI rose 2.6 percent in June, the largest gain since increasing 2.7 percent in March 2023, the report added. But an underlying measure stripping out food, energy and trade services was unchanged in June after a 0.2 percent rise in May. Some analysts expect the Fed could signal in its July meeting that it intends to lower rates in September. "Although slightly hotter than expected, a modest rise in the producer price index for June still keeps input prices on a supportive path for cooler inflation prints ahead," said Ben Ayers, senior economist for Nationwide. In a media interview on Thursday, San Francisco Fed President Mary Daly said: "I do think with the incoming information on inflation, growth and the labour market, some policy adjustments are likely to be warranted." (AFP)