WASHINGTON - The producer price index rose 0.3% in July, above expectations for a 0.2% rise, as food prices rose 0.5% and the core PPI rose 0.4%, offsetting a 0.4% decline in energy prices, data released Tuesday by the Bureau of Labor Statistics showed.
Despite the larger-than-expected increase in the overall PPI, the largest since February, the year/year rise for that measure slowed further to 0.5%, the slowest 12-month rate since a 2.0% decline in October 2009.
The core PPI price rise was the fastest since January, but the year/year rate slowed to 2.5% in July, down from 2.6% in June and the slowest annual rise since 2.3% in June 2011.
The 0.5% rise in food prices in July was the result of increases in a number of categories. The BLS said that "over half of the July increase can be traced to prices for beef and veal," which posted a 3.8% increase in the month.
In addition, corn prices rose 34.5% in the month, the largest rise since October 2006 and perhaps the result of the ongoing drought in growing regions.
Energy price tumbled for the fifth straight month, with a 3.1% decline in gasoline prices accounting for most of the decline according to the BLS.
In addition, there was a decline in the price of heating oil, with and offsetting gain in the price of electric power.
Within the core, prices of passenger cars rose 1.1%, the largest gain since a 1.5% rise in June 2009. Light truck prices rose 1.6% in July, the largest gain since a 2.2% rise in November 2009. Tobacco products prices rose 1.8% in the month.
In the inflation pipeline, intermediate goods prices were down 0.9%, both including and excluding food and energy prices. Crude prices, however, were up 1.8% in July, but were down 1.1% excluding food and energy prices.
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