EmailProducer prices tumbled in June as the PPI declined 0.4% after increasing 0.2% in May. This was the first decline since June 2010. The Briefing.com consensus expected the PPI to fall 0.2%.
The drop in producer prices was the direct result of the recent decline in oil and gasoline prices. The index for finished energy goods fell 2.8% -- the biggest drop since July 2009 -- after increasing by 1.5% or more for the last eight consecutive months. Gasoline prices fell 4.7% and accounted for nearly two-thirds of the decline in energy costs.
Food prices increased 0.6% in June as prices for fresh fruit and melons increased 11.8%.
Core PPI increased 0.3% in June after a 0.2% increase in May. This was the seventh consecutive month of core-PPI growth. The consensus expected core prices to increase 0.2%.
As expected, the supply shortages in the motor vehicle sector boosted prices of cars and trucks. In fact, a 1.6% increase in light truck prices accounted for nearly 50% of the entire increase in core prices.
Unfortunately, price increases in the motor vehicle sector likely passed through to consumers as well. This could lead to higher core consumer prices than the consensus currently expects for the June CPI report.
