Washington, DC, July 18, 2006--Producer prices rose by a larger-than-expected 0.5% in June, but core inflation increased 0.2% as expected, the Labor Department reported Tuesday.
Higher energy and food prices accounted for most of the gain in June in the producer price index for finished goods.
Energy prices rose 0.7% in June, as wholesale gasoline prices jumped a surprising 6.3%. Natural gas and residential electricity prices fell. Food prices rose 1.4%, the most since October 2004.
The core rate, which excludes food and energy prices, was boosted by a 0.9 increase in passenger car prices and a solid 0.3% gain in capital goods prices.
Inflationary pressures were mixed further back in the production pipeline. Prices of crude materials fell 1.7%, while intermediate goods prices rose 0.7%. Core intermediate goods prices rose 0.8% on price increases for metals, chemicals and containers.
The 0.5% gain in the PPI was much larger than the 0.2% expected by economists. The core rate was as predicted.
In May, the PPI had risen 0.2%, with core prices up 0.3%.
In the second quarter, the PPI increased at 6.7% annual rate. The core PPI increased at a 1.9% annual rate.
In the past year, the PPI is up 4.9%, the fastest year-over-year gain since January. The core PPI is up 1.9% in the past year, the biggest gain since September.
Prices for core intermediate goods - a key gauge of pipeline inflationary pressures - have risen 7.3% in the past year, the most in 15 months.
