The US Producer Price Index fell by 0.3% in June following a 0.6% increase in May, below the expectations for a flat reading in a survey compiled by Bloomberg as of 7:25 am ET.
Energy prices fell by 6.4% in the month following an 8.4% gain in the previous month. Gasoline prices declined by 12%, while diesel fuel decreased by 18%. Food prices decreased by 0.6% after a 0.5% gain in May.
After excluding food and energy prices, core PPI rose by 0.2%, slower than the 0.3% gain expected and following a 0.1% gain in the previous month.
PPI was up 5.5% year-over-year in June, slower than a 6% gain in May, while core PPI increased by 4.7% year-over-year, up from 4.6% rate in May. The year-over-year rate for PPI excluding food, energy and trade services remained at 5.1%.
The monthly producer price index, or PPI, reported by the Bureau of Labor Statistics measures the index level of prices received by producers for products such as energy, food, vehicles, and services. The core measure, excluding the volatile food and energy components, is a measure of underlying inflation.
Sharply higher prices are a sign of demand, but an increase at the producer level without a pass-through to the consumer level would suggest smaller profits at the retail level. As a result, the stock reaction depends on the movements at both levels. Higher inflation is generally a negative for bonds.