The latest data from the Labor Department reveals that U.S. supplier prices experienced a modest 0.1% rise in June compared to the previous month. This increase comes amidst a general trend of inflation easing throughout the year.
The producer-price index, which measures the prices that businesses receive for their goods and services, had declined by 0.4% in May before this slight uptick. Furthermore, on an annual basis, producer prices marked a meager 0.1% growth in June, showing a significant slowdown from the 5.7% surge recorded in January. In fact, this is the smallest year-over-year increase for the index since its decline in August 2020.
When excluding the volatile food and energy sectors, the index still saw a 0.1% increase from May and a 2.4% rise from the previous year.
Given the Federal Reserve’s focus on price trends across the wider economy, these figures will play a part in determining how the central bank utilizes its benchmark interest rates to bring inflation to its target of 2%. The latest data from the Labor Department also revealed that consumer prices rose by 3% in June compared to the previous year, representing the slowest increase in over two years. Consequently, while the Fed is likely to proceed with an interest rate hike at their upcoming policy meeting in July, the overall cooling of inflation raises questions about the necessity of further increases.