June 17 Producer Price Index

Prices paid by producers and wholesalers edged higher in June 2017 according to data from the Bureau of Labor Statistics. After remaining unchanged in May, the Producer Price Index (PPI) managed an uptick of just 0.1 percent. Compared to a year earlier, this price proxy is 2.0 percent higher, falling from 2.4 percent in the prior month. Excluding food, energy, and trade, the core-PPI rose 0.2 percent in May and 2.0 percent versus a year ago.

Price measures for earlier stages of production were mixed. Processed goods for intermediate demand dropped 0.2 percent after rising just 0.1 percent a month earlier. Despite the negative total, food rose 1.2 percent, but this was more than offset by declines in all of the other categories, including a 0.6 percent drop in energy costs; on a year-over-year basis, prices for processed intermediate goods increased at the slowest pace since December 2016. Unprocessed goods for intermediate demand rose 1.5 percent after falling 3.0 percent in May. This price statistic for the earliest stage of goods production decelerated to 6.3 percent versus a year ago, its slowest pace since November 2016. However, the trend for early stage services rose to the highest level since November 2012, reaching 2.9 percent from a year earlier; the rate of change in June alone was 0.6 percent.

Prices paid for services accelerated while costs for goods showed signs of deceleration. Despite the varying changes, inflation on both sides of the economy is roughly in line with the Federal Reserve’s target according to PPI data. America’s monetary policy makers define price stability as a 2.0 percent annual trend, and both the headline and core tallies hit the mark in June on a year-over-year basis. While this is not their preferred measure of inflation, it does suggest the economy’s prices are moving in line with the central bank’s desires.