1 of 2 | Broader markets were at something of a standstill during the latter half of the week as traders weigh declines in prices at both the wholesale and consumer level against the Fed's next move on rates. File photo by John Angelillo/UPI |
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July 13 (UPI) -- The Producer Price Index, a reflection of prices at the wholesale level, increased only by 0.1% last month and was the slowest in nearly three years on an annual basis, data released Thursday showed.
PPI barely moved month-on-month to June and data for May was revised to show a 0.4% contraction, compared with the 0.3% reading the prior month. Year-on-year to June and the PPI increased by 0.1%, the slowest since August 2020. Over the 12-month period to May, the PPI increased by 0.9%.
Food and energy prices, similar to conditions at the consumer level, are highly volatile month on month. Stripping those prices out, and PPI declined by 0.2% to June.
PPI data came one day after the Labor Department reported that consumer prices over the 12-month period to June increased by 3%, which marked a slowdown relative to May levels. Consumer-level inflation had topped 9% this year and the decline is in part a response to aggressive rate hikes from the U.S. Federal Reserve.
So-called core inflation, which strips out food and energy prices at the consumer level, was at 4.8% annually to June, only slightly lower than in May. Elsewhere, personal consumption expenditures, the Federal Reserve's preferred gauge of inflation, rose slightly in May.
Market watchers will be combing over U.S. economic data over the next couple of weeks to get a sense of what the Fed does next. It paused rate hikes last month, though Federal Reserve Chairman Jerome Powell has hinted that at least two more rate hikes are coming.
Craig Erlam, a senior market analyst at the brokerage OANDA, said a few data points do not make for a comprehensive picture of the U.S. economy.
"That said, it's unlikely to change the outcome of the debate that takes place in two weeks," he said.
The Fed meets during the last week of July to consider its next move and Erlam said it's highly likely it will impose another rate increase of 25 basis points.
Broader markets were unfazed by recent data, with the Dow up only a half percent at the start of trading Thursday.
