US final demand prices edge up in June but unchanged at the core level

According to the Department of Labor, final demand prices edged up at a 0.1% month-on-month pace in June for a year-on-year rate of change of 1.7%., which was exactly as expected.

In May, wholesale prices had advanced by 1.8% in comparison to a year ago.

Goods prices dropped by 0.4% on the month, dragged down by a 3.1% fall in energy costs, whereas services costs increased by 0.4%.

At the core level, which excludes food and energy, prices were flat and if trade costs are also excluded then the rate of increase in final demand prices slipped from 2.3% for May to 2.1%.

If one only looked at core final demand inflation excluding food and energy, then prices printed at up by 2.3% on the year, Blerina Uruci at Barclays Research pointed out.

And personal consumption PPI, which broadly tracks headline consumer prices was up by 0.2% and its core rate 0.5% higher on the month and 2.5% year-on-year, validating the rise in core CPI published the day before, she added.

"Overall, we see the improvement in the pace of inflation for CPI and PPI as a positive step, but would caution against extrapolating one month of solid data," Uruci said.

"We think that given the recent broad-based weakness in inflation, the FOMC would need to see a sustained improvement in the trend of consumer and producer prices before being comfortable that it is making sufficient progress toward its price stability mandate."