Prices on U.S. goods and services rose 0.5% in June, the steepest increase in more than a year and reflective of rising energy and food prices, according to the Labor Department’s Producer Price Index, released Thursday.
June’s results reflect an acceleration of price increases from U.S. producers; the rise compares with a 0.4% jump in May and a 0.3% bump in April, an increasing pace that may impact inflation. Producer prices have risen 0.3% overall for the previous 12 months.
“Inflation should gradually pick up in late 2016 and then over the next few years,” PNC economist Gus Faucher said in a note, according to The Wall Street Journal. “Stronger wage growth and stabilizations in energy prices and the U.S. dollar should eventually lead to an acceleration in inflation.”
The index for final demand services increased by 0.4 % in June, driven largely by services related to securities brokerage and dealing, which rose 7.7%.
The index for final demand goods advanced 0.8% last month, the largest rise since May 2015. More than three-quarters of the June increase can be traced to energy prices, up 4.1%, with most of that attributable to a 9.9% one-month jump in gasoline prices. Prices for meats, jet fuel, electric power, home heating oil, and cigarettes also moved higher.
The index for food prices rose 0.9%, after an increase of 0.3% in May.
“Overall price pressures are still on the low side, especially if the volatile food, energy, and trade margin categories are stripped out,” said MarketWatch’s Jeffrey Bartash. “So called core prices rose a smaller 0.3% in June.”
The Labor Department is scheduled to release its monthly report on consumer prices on Friday.