June 2018 Producer Price Index

Prices paid by producers and wholesalers continued edging higher in June according to the Bureau of Labor Statistics.  Their Producer Prince Index (PPI), which measures final demand, rose 0.3 percent as the first half of 2018 ended.  This increase follows upticks of 0.1 percent and 0.5 percent in April and May respectively.  Year-over-year, the PPI gained 3.4 percent, the largest 12-month increase since November 2011.

Costs associated with earlier stages of output were mixed.  Processed goods for intermediate demand rose 0.7 percent.  While this is the third consecutive rise, it slowed from 1.5 percent in May.  Like a month earlier, energy costs led the move, but this time they slowed from 4.6 percent to 1.8 percent. Unprocessed goods for intermediate demand fell in the period, declining 1.0 percent after rising 2.5 percent in June.  Unlike in the processed counterpart, energy related costs fell in this earliest stage of output.

Early stage services increased in June, but its trend slowed.  Rising 0.1 percent, June’s count decelerated from 0.3 percent in May.  Versus 12 months ago, this stage of services is 2.9 percent higher; like the monthly statistic, this is a deceleration from May’s count (3.3 percent). 

Based on the year-over-year tally in PPI and other price proxies we watch (e.g., CPI, PCE-Price Index) inflation appears to be on the rise.  However, the pace of increase has yet to reach levels with which to be concerned.  With that in mind, Atlas won’t fall asleep at the wheel.  We will continue monitoring these various price measures and bring any notable accelerations to your attention.