Producer Prices During July Increased 0.5% --- Inventory in June Rose 0.7% As Sales Surged 1.5%; Higher Prices Projected
WASHINGTON -- July's 0.5% rise in producer prices suggests inflation could increase sharply in coming months, many analysts said.</br></br>Excluding the often volatile food and energy components, the Labor Department said, producer prices jumped by 0.6% in July, double the 0.3% increase in June. This measure hasn't climbed more in a single month since a 0.7% rise in October 1986.</br></br>In a separate report, the Commerce Department said that business inventories in June rose 0.7% while business sales were up a sharp 1.5%. The ratio of inventories to sales fell slightly to 1.50 from 1.51.</br></br>The Labor Department also reported a 0.7% increase in prices of semiprocessed, or intermediate, goods. These materials have risen by 0.6% or more in each of the past four months.</br></br>Some analysts said that the price increases in finished goods indicate the increases in raw material and intermediate goods prices of earlier months had passed on to higher prices in final goods. And the continuing increases in the price of intermediate goods suggests further rises in consumer prices, they said.