US Producer Inflation Flat in June but Goods Costs Up
US wholesale prices were flat in June on a decline in services costs, according to government data released Wednesday, as goods prices jumped although the overall hit from President Donald Trump’s tariffs was relatively muted.
This came as a 0.1 percent drop in services costs was offset by a 0.3 percent uptick in goods prices, the report added.
In June, Trump showed little signs of backing off his sweeping tariffs as a deadline approached for levies on dozens of economies to increase.
He eventually postponed the deadline to August, but a 10 percent duty remains on imports from most trading partners, alongside steeper rates on steel, aluminum and autos.
These costs have begun to feed in to the world’s biggest economy, although the effect on inflation has been relatively tame so far.
Analysts are monitoring if the eventual hit will be one-off or if the duties might trigger more persistent inflation.
A separate report by the Federal Reserve on Wednesday showed industrial production rose 0.3 percent in June after being flat in April and May.
The June figure was largely driven by utilities, while manufacturing output edged up and that of mining declined.
– Muted tariff hit –
On Wednesday, the PPI report noted that more than half of the goods uptick could be traced to a “core” measurement that strips out the volatile food and energy segments.
Indexes for gasoline, residential electric power, certain meats and tree nuts moved higher, the report said.
But this “doesn’t suggest a broad-based increase related to tariffs,” said Matthew Martin, senior US economist at Oxford Economics.
“Tariff exposed goods such as household appliances posted strong gains, but apparel and toys were mostly unchanged,” he said in a note.
He expects the Fed to remain on pause for now as it watches for further pressure on goods prices.
Meanwhile, the prices of services edged down, in large part because of a drop in costs for traveler accommodation services, the PPI report said.
From a year ago, PPI was up 2.3 percent in June, cooling from 2.7 percent in May.
