U.S. wholesale prices surged again in June, signaling that a recent bout of high inflation is likely to last at least through the summer.
The producer price index jumped 1% last month, the government said Wednesday. Economists polled by The Wall Street Journal had forecast a 0.6% increase.
The rate of inflation was quite low as recently as the end of last year, but it’s risen sharply in 2021 as a fully reopened economy unleashed a wave of pentup demand that businesses have been unable to satisfy.Read: The cost of living posts biggest surge since 2008, CPI shows, as inflation spreads through economy
Yet Powell also acknowledged inflation has “increased notably and will likely remain elevated in coming months.”Right now consumer prices are rising at a 5.4% yearly pace — the fastest increase since 2008.Used-car prices, a huge contributor to high inflation, are set to start declining. And the cost of both shelter and medical care, the two biggest expenses for most households, have been fairly tame this year.
It’s small consolation to consumers, though. Gas prices have surged and the cost of food is also going up. That will pinch household income for the foreseeable future.Key details: About 60% of the increase in wholesale inflation reflected the higher cost of services, a volatile category that can swing sharply from month to month.
Higher prices of corn and other farm goods are expected to raise the cost of groceries in the coming months. The increase in the core rate over the past 12 months edged up to 5.5% from 5.3%. That’s the largest advance since the government first began reporting it in 2014.
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