The CPI-based Ecumenical Underlying Inflation measure came in at 2.5% in June.
This is the median of 21 different measures (7 concepts over 3, 6 and 12 months)–all remeaned to match the PCE targeted by the Fed. pic.twitter.com/NZ6RUxgfW7
— Jason Furman (@jasonfurman) July 11, 2024
Wholesale price inflation unexpectedly accelerated in June to its highest rate since March 2023, according to new data released Friday. This development appears especially jarring as it comes just one day after the Bureau of Labor Statistics announced a drop in the Consumer Price Index for the first time in four years. Economists caution that monthly data, particularly the category that drove the Producer Price Index (PPI) higher in June, can be erratic.
They suggest that the unexpected jump in PPI isn’t likely to signal broader inflation pressures building.
Wholesale inflation is up and Americans are hurting. Bidenomics has failed at every turn.https://t.co/LL8AXKkSM8
— Rep. Mark Green (@RepMarkGreen) July 12, 2024
The increase was attributed to a sharp rise in trade services margins, which soared 1.9% from May and offset lower energy prices and continually falling goods production prices. It marked the largest monthly increase for trade services since March 2022.
Year on Year Inflation Rate (%) based on Consumer Food Price Index (CPI)
Press Release link of CPI for the month of June 2024 :- https://t.co/myG123bU2n#KnowYourStats #DataForDevelopment #CPI #Retailinflation pic.twitter.com/Aj7ZHusvQV
— Ministry of Statistics & Programme Implementation (@GoIStats) July 12, 2024
“The increase was broad-based among wholesalers and retailers of fuel, autos, and other goods, but almost certainly is not the start of a resurgence in margins,” stated Ian Shepherdson, chairman and chief economist for Pantheon Macroeconomics. He added that the data are volatile and often revised and that margins will come under increasing pressure as consumer spending growth slows. Economists had initially expected prices to grow by 0.1% on a monthly basis and hold steady at 2.2% annually.
Two months comparison (June 2024 Prov. vs May 2024) of Inflation based on Consumer Price Index for Subgroup Food & Beverage
Press Release link of CPI for the month of June 2024 :- https://t.co/xS9QOEHaFb
#KnowYourStats #DataForDevelopment #CPI #Retailinflation pic.twitter.com/Fx2oSGAaCZ
— Ministry of Statistics & Programme Implementation (@GoIStats) July 12, 2024
Stripping out energy and food-related prices, core PPI jumped 0.4% for the month, rising 3% annually, the highest rate since April 2023.
June’s unexpected PPI increase
To eliminate the influence of the volatile trade services, economists also examine a “core core” reading, which excludes energy, food, and trade services.
According to Andreas Hauskrecht, a professor of business economics at Indiana University’s Kelley School of Business, this approach helps identify trends more accurately. In June, the PPI excluding energy, food, and trade services remained flat for the month and slowed to 3.1% annually from 3.3% in May, according to Bureau of Labor Statistics data. For U.S. consumers, inflation has been trending in a desired direction over the past couple of months.
Despite a brief surge in price hikes in the first quarter, inflation has cooled considerably. On Thursday, the Consumer Price Index, a widely used inflation gauge, showed that prices dropped on a monthly basis for the first time since May 2020, and annual inflation slowed to 3%, its slowest rate since June 2023. The PPI data from June doesn’t reflect a shift in inflation’s slowing trajectory, said Chris Rupkey, chief economist at FwdBonds.
“We think core [Personal Consumption Expenditures] inflation for June is still likely to be either unchanged or showing the same modest 0.1% increase as in May,” he noted. In addition, energy-heavy transportation and warehousing operations saw prices fall in both the early and final purchasing stages of their business, indicating that supply-side pressures are easing. This trend suggests that the second half of 2024 will likely see diminishing cost pressures for producers, as well as reduced shipping costs for retailers, according to PNC Financial Services senior economist Kurt Rankin.
