AP – Wholesale prices in the United States (US) picked up in July yet still suggested that inflationary pressures have eased this year since reaching alarming heights in 2022.
The Labour Department reported on Friday that its producer price index – which measures inflation before it hits consumers – rose 0.8 per cent last month from July 2022.
The latest figure followed a 0.2-per-cent year-over-year increase in June, which had been the smallest annual rise since August 2020.
On a month-to-month basis, producer prices rose 0.3 per cent from June to July, up from no change from May to June.
Last month’s increase was the biggest since January. An increase in services prices, especially for management of investment portfolios, drove the month-to-month increase in wholesale inflation. Wholesale meat prices also rose sharply in July.
Analysts said the July rise in wholesale prices, from the previous month’s low levels, still reflects an overall easing inflation trend.
The figures the Labour Department issued on Friday reflect prices charged by manufacturers, farmers and wholesalers.
The figures can provide an early sign of how fast consumer inflation will rise in the coming months.
Since peaking at 11.7 per cent in March 2022, wholesale inflation has steadily tumbled in the face of the Federal Reserve’s (Fed) 11 interest rate hikes.
Excluding volatile food and energy prices, core wholesale inflation rose 2.4 per cent from July 2022, the same year-over-year increase that was reported for June.
Measured month to month, core producer prices increased 0.3 per cent from June to July after falling 0.1 per cent from May to June.
On Thursday, the government reported that consumer prices rose 3.3 per cent in July from 12 months earlier, an uptick from June’s three-per-cent year-over-year increase.
But in an encouraging sign, core consumer inflation rose just 0.2 per cent from June, matching the smallest month-to-month increase in nearly two years.
By all measures, inflation has cooled over the past year, moving closer to the Fed’s two-per-cent target level but still remaining persistently above it.
The moderating pace of price increases, combined with a resilient job market, has raised hopes that the Fed may achieve a difficult soft landing: Raising rates enough to slow borrowing and tame inflation without causing a painful recession.
Chief US Economist at High Frequency Economics Rubeela Farooqi, noted that Friday’s report showed producer prices running above expectations. But she added that “the year-on-year changes still show headline producer prices below and core heading towards two per cent.”
“The July data alone don’t necessarily signal a change in the trend,” Farooqi said.
Farooqi and many other economists and market analysts think the Fed’s most recent rate hike in July could prove to be its last.
