Deflation: Producer Price Index Falls Unexpectedly June

Producer price index falls surprisingly in June

July 10 (UPI) — The Labor Department said Friday the producer price index fell 0.2 percent in June after increasing in May, surprising some predictions.

The index had increased by 0.4 percent in May before falling in June. Over the past 12 months, the index has dropped 0.8 percent.

Economists surveyed by Bloomberg predicted that the producer price index would increase by 0.4 percent in June.

“Prices for final demand less foods, energy and trade services advanced 0.3 percent in June, the largest increase since a 0.3-percent rise in January,” the Bureau of Labor Statistics said. “For the 12 months ended in June, prices for final demand less foods, energy, and trade services edged down 0.1 percent.”

The report said the final demand services index fell 0.3 percent in June, the largest decrease since falling by the same rate in February. It was driven by a 1.8 percent in final demand trade services, which measures the change in margins received by wholesalers and retailers.

A 7.3 percent decline in margins for machinery and vehicle wholesaling accounted for 80 percent of June’s decline in final demand services. The report said indexes for apparel, jewelry, footwear, and accessories retailing; fuels and lubricants retailing; dental care deposit services (partial); and long-distance motor carrying all fell.

The producer price index measures the average change over time in the selling prices received by domestic producers for their output.

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