WASHINGTON: US wholesale prices spiked by their largest margin in 27 years in the year to July as inflationary pressures continue to roil the world’s largest economy, a government survey showed yesterday.
The report showed that the Labor Department’s producer price index (PPI), a key gauge of inflation at the wholesale level, rose by a hefty 9.8 percent in July from a year ago. That marked the biggest surge in annualized headline prices at the factory and farm gate since a 10.4 percent gain was recorded in June 1981.
The reading will likely not be welcomed by the Federal Reserve, which has been waging a campaign against inflationary pressures, but Fed policymakers expect inflationary pressures to ebb in coming months, especially as oil prices have cooled markedly of late.
On a monthly basis, overall prices rose by a more-than-expected 1.2 percent in July against market forecasts which had predicted a rise of 0.4 percent. Headline PPI had climbed 1.8 percent in June.
The core PPI rate, which strips out volatile energy and food costs, increased by a more-than-anticipated 0.7 percent in July from June, or 3.5 percent over the past 12 months. Economists had predicted a lesser core rate monthly increase of 0.2 percent. The 3.5 percent jump in the annualized core rate was the strongest since May 1991.
The larger-than-predicted rise in the core reading suggests producers may be trying to pass on increased costs through the price-chain as they vie to absorb rising prices which have swept through the economy. Wholesale food costs moderated in July from the prior month to show a gain of 0.3 percent and while energy prices also eased they remained relatively high, posting a gain of 3.1 percent in July, up from a 6.0 percent jump in June.
