Producer Price Index (PPI): A worker in a wholesale foods production and distribution warehouse.
The Labor Department reported Wednesday that the Producer Price Index (PPI) increased by 0.4 percent in June, beating expectations for a gain of 0.2. Excluding the food and energy components, prices rose 0.3 percent juxtaposed to expectations for a gain of 0.1 percent.
According to the Bureau of Labor Statistics, nearly two-thirds of the increase in the final demand index can be attributed to prices for final demand goods, which rose 0.7 percent. The index for final demand services advanced 0.3 percent, while intermediate demand, prices for processed goods climbed 0.7 percent.
A whole 30 percent of the June gain in producer prices for final demand goods reflects an increase in the gasoline index, which rose 4.3 percent. Prices for chicken eggs, pharmaceutical preparations, residential electric power, residential natural gas, and cigarettes also moved higher. In contrast, the index for fresh and dry vegetables fell 6.0 percent. Prices for liquefied petroleum gas and electronic computers also decreased.
The PPI comes ahead of the more closely-watched Consumer Price Index (CPI), which will gauge inflation. The Federal Reserve is looking for a target inflation rate before increasing interest rates, but they have a separate internal survey they use apart from the CPI.
