Excluding volatile food and energy prices, core PPI also rose 0.5%, compared with the Dow Jones estimate of 0.2%. Excluding trade services from the core group, sales increased by 0.4% from the previous month, or by 3.1% on a 12-month basis, the highest level since April 2023.
On a year-on-year basis, wholesale inflation rose 2.2%, also the highest in a year. Core PPI inflation was 2.4%, the largest annual increase since August 2023. Both figures were in line with Reuters forecasts.
The data left stock market futures near break-even, while Treasury yields were mixed.
Chris Larkin said: “Inflation appeared to be deadlocked this morning following the announcement of much higher-than-expected inflation. However, with last month's numbers revised downwards, this report “The book may not have been as much of an upside shock as initially thought.” , Managing Director of Trading and Investments at Morgan Stanley's E-Trade.
Service prices pushed up overall inflation, rising 0.6%, accounting for about three-quarters of the overall increase, while the final demand goods index rose 0.4%. The increase in services was the largest monthly increase since July 2023, the BLS reported.
Portfolio management contributed to higher service costs, up 3.9% month-on-month.
Commodity prices, as measured by PPI, rose 0.4%, reversing a 0.2% decline due to a 2% rise in the energy index, including a 5.4% rise in gasoline prices. The final food demand index fell by 0.7%.
The latest inflation data comes as the Federal Reserve has an extended hold on interest rates. Policymakers have said in recent days that they expect inflation to trend downward through the rest of the year, but that they need inflation to be convincingly returning to the central bank's 2% target before cutting rates. He says more evidence is needed.
Recent data points are not encouraging.
The PPI's counterpart, the Consumer Price Index, which measures what consumers pay rather than what producers receive, showed a stronger-than-expected rise through the first half of 2024, with inflation rising faster than economists and policymakers had expected. There are also growing concerns that the economy is still going strong.
Similarly, the Commerce Department's Personal Consumption Expenditure Price Index, a Fed-recommended measure, is trending upwards, showing that inflation is just shy of 3%.
Various inflation measures all point to price pressures well above the Fed's target.
Moreover, various consumer surveys show that expectations are rising. The Federal Reserve Bank of New York's monthly survey released on Monday projected inflation a year from now at 3.3%, the highest level since November, largely due to expectations that housing costs will continue to rise.
