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US Producer Inflation Firming

US Producer Inflation FirmingUS Producer Inflation Firming

US producer prices rose more than expected in June as the cost of gasoline and a range of other goods rose, indicating the recent oil-driven downward spiral in prices was abating.

Other data on Wednesday showed a rebound in factory activity in New York state this month. The signs of stabilizing manufacturing and firming inflation came as Federal Reserve Chair Janet Yellen said the US central bank remained on track to raise interest rates this year, Reuters reported.

The Labor Department said its producer price index for final demand increased 0.4 percent last month after increasing 0.5 percent in May. It was the second straight month of increase in producer prices.

A 0.7 percent increase in goods prices accounted for nearly two-thirds of the increase in the PPI last month. In the 12 months through June, the PPI fell 0.7 percent after declining 1.1 percent in May. It was the fifth straight 12-month decrease in the index.

Economists polled by Reuters had forecast the PPI rising 0.2 percent last month and falling 0.9 percent from a year ago.

In testimony prepared for the U.S. House of Representatives Financial Services Committee, Yellen affirmed the view of a central bank prepared to gradually raise rates after more than six years at a near-zero level.

"If the economy evolves as we expect, economic conditions likely would make it appropriate at some point this year to raise the federal funds rate," Yellen said.

A key measure of underlying producer price pressures that excludes food, energy and trade services increased 0.3 percent last month after dipping 0.1 percent in May. The so-called core PPI was up 0.7 percent in the 12 months through June.

 

Financialtribune.com