U.S. 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, the Labor Department said on August 19. The producer price index (PPI), a key gauge of inflation at the wholesale level, rose by a hefty 9.8% 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% gain was recorded in June 1981.
On a monthly basis, overall prices rose by a more-than-expected 1.2% in July against market forecasts which had predicted a rise of 0.4%. Headline PPI had climbed 1.8% in June.
The core PPI rate, which strips out volatile energy and food costs, increased by a more-than-anticipated 0.7% in July from June, or 3.5% over the past 12 months. Economists had predicted a lesser core rate monthly increase of 0.2%.
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.
Energy prices also eased they remained relatively high, posting a gain of 3.1% in July, up from a 6% jump in June. Prices of big-ticket durable goods rose 0.6% last month, showing an acceleration from a 0.3% reading in June.
Durable goods include autos and large household appliances such as refrigerators and washing machines. The rise in durable goods prices suggests producers may be struggling to endure rising material costs.
Copyright Agence France-Presse, 2008
