In another indication that inflation may be stalling, U.S. wholesale prices increased only slightly in June, with most of the increase coming from rising prices for services.
The Labor Department said the producer-price index edged up 0.1% last month after being flat in May. Economists surveyed by MarketWatch had predicted no change in the PPI.
The PPI reading is in line with other inflation indicators, including the consumer-price index and the Federal Reserve’s preferred inflation gauge, personal-consumption expenditures (PCE), that show inflation is tapering off after rising steadily in 2016 and early 2017.
The PCE has slowed to an yearly rate of 1.4% from a five-year high of 2.1% earlier in 2017.
“The slowdown has surprised the Federal Reserve and prompted some senior central-bank officials to question whether further [interest] rate increases are merited in an environment of stubbornly low consumer prices and inflation,” MarketWatch said.
Most of the June increase in the PPI reflected rising prices for services, including a 4% jump in the cost of brokerage and other investment services. Wholesale energy prices fell 0.5%, including a 1.1% drop in gasoline prices, while the price of repairing and maintaining cars and trucks fell 1%, the most in more than two years.
In June, the wholesale cost of food jumped 0.6%, largely due to higher prices for meats and potatoes. Excluding volatile food and energy prices, wholesale inflation was up 0.1% last month from May and 1.9% from a year earlier.
“The PPI suggests that there isn’t a significant amount of price pressures in the pipeline,” Ryan Sweet, director of real-time economics at Moody’s Analytics, said.
The Fed has set a target of 2% inflation. But Fed Chair Janet Yellen told lawmakers on Wednesday that the economy was healthy enough for the central bank to raise rates and begin winding down its massive bond portfolio.