Partly reflecting a notable increase in prices for services, the Labor Department released a report on Tuesday showing U.S. producer prices climbed by more than expected in the month of July.
The Labor Department said its producer price index for final demand rose by 0.6 percent in July after dipping by 0.2 percent in June.
The rebound in producer prices reflected the largest increase since October of 2018 and exceeded economist estimates for an uptick of 0.3 percent.
Energy prices showed another substantial increase during the month, spiking by 5.3 percent in July after soaring by 7.7 percent in June.
Meanwhile, the report said food prices fell by 0.5 percent in July after plunging by 5.2 percent in the previous month.
Excluding food and energy prices, core producer prices still climbed by 0.5 percent in July after falling by 0.3 percent in June. Economists had expected core prices to inch up by 0.1 percent.
The much bigger than expected increase in core prices came as prices for final demand services also rose by 0.5 percent in July following a 0.3 percent drop in June.
The Labor Department said about 60 percent of the growth in prices for services can be traced to a 0.4 percent increase in prices for final demand services less trade, transportation, and warehousing.
Prices for final demand trade services also advanced by 0.8 percent, while prices for final demand transportation and warehousing services slumped by 0.8 percent.
Compared to the same month a year ago, producer prices in July were down by 0.4 percent following a 0.8 percent decrease in June.
The annual rate of growth in core producer prices accelerated to 0.3 percent in July from 0.1 percent in the previous month.
On Wednesday, the Labor Department is scheduled to release a separate report on consumer prices in the month of July.
Consumer prices are expected to rise by 0.3 percent in July after climbing by 0.6 percent in June, while core consumer prices are expected to edge up by 0.2 percent for the second straight month.
The material has been provided by InstaForex Company – www.instaforex.com