Inflation concerns deepen for President Biden as the producer price index surges higher than expected, signaling a potential setback in the battle against rising prices.
Bad news for President Biden as inflation surges higher. Prices paid by businesses in the United States unexpectedly increased significantly in June, undermining confidence that inflation might be waning.
The producer price index (PPI) rose by 0.2 percent last month, according to government data released on Friday. This was twice the increase anticipated by economists.
Additionally, the prior month’s prices were revised upwards, erasing what had initially appeared to be a slight decline. The revised May PPI showed prices were flat instead of declining by 0.2 percent.
Compared to a year ago, the PPI is up 2.6 percent, exceeding the economists' forecast of a 2.3 percent rise. The previous month’s year-over-year figure was revised from 2.2 percent to 2.4 percent.
These figures indicate that producer inflation accelerated in June.
Core PPI, which excludes food and energy prices, increased by 0.4 percent, twice what economists had predicted. The previous month’s estimate was revised from flat to a 0.3 percent increase.
On a 12-month basis, core prices have risen by three percent, a significant jump from the upwardly revised 2.6 percent year-over-year increase in May. The May figure was initially reported as a 2.3 percent increase.
This marks the largest year-over-year increase in PPI in over a year and the sixth consecutive rise for the index.
So-called core-core prices, which exclude the often-volatile food and energy prices as well as profit margins at wholesalers and retailers, remained unchanged.
The prior month’s core-core figure was revised up from flat to a gain of 0.2 percent. The annual figure for May was revised from a 3.2 percent gain to 3.3 percent.
The PPI report undermines hopes of declining inflation generated by Thursday’s consumer price index report, which came in lower than expected for the second consecutive month.
While the consumer price index captures what consumers pay for goods and services produced both domestically and internationally, the PPI is limited to prices paid to domestic producers and includes prices paid by businesses and government. Despite often being referred to as a “wholesale price index,” it does not specifically relate to wholesale prices.
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