WASHINGTON – Business inflation ended up on the barely positive side in June as food prices — mostly for holiday boosted meats — counterbalanced the drop in gasoline.
The producer price index report from the Bureau of Labor Statistics, up 0.1% in June, reflected some one-time factors on the plus side that overcame the dip in energy, including pre-holiday demand for meats, a category up 5.5%.
"There was a higher demand for a variety of meats prior to the July 4 holiday," BLS senior analyst Scott Sager told Market News International during the data "lockup" prior to publication.
There was also a price spurt for financial categories caused by financial institutions anticipating the baked-in Federal Reserve rate hike that immediately followed the PPI pricing date.
Sager told MNI that "a lot of financial institutions anticipated the rate hike so rates were creeping up." The result was that financials were a "major factor," the report said, in the June 0.4% increase in final demand services.
Another one-time factor was the 0.9% outsized rise in pharmaceutical prices which reflected the now routine pattern of twice-a-year adjustments in that industry, the second coming at mid-year, Sager said.
The annual change in the PPI through June is a 2.0% inflation rate for the goods and services businesses buy.
Final demand services prices rose 0.2% for the month and the index for final demand goods was up 0.1%.
The core rate the BLS prefers, excluding changes in volatile profit margins as well as food and energy, rose 0.2%
