WASHINGTON (Reuters) - U.S. producer prices increased slightly more than expected in June amid gains in the cost of services and motor vehicles, leading to the biggest annual increase in 6-1/2 years.
The report published by the Labor Department on Wednesday also showed a pickup in underlying producer inflation last month. The data supports views of steadily rising price pressures, which will probably allow the Federal Reserve to increase interest rates two more times this year.
The producer price index for final demand climbed 0.3 percent last month after rising 0.5 percent in May. In the 12 months through June, the PPI advanced 3.4 percent, the largest gain since November 2011. Producer prices increased 3.1 percent year-on-year in May.
Economists polled by Reuters had forecast the PPI gaining 0.2 percent in June and rising 3.2 percent year-on-year.
A key gauge of underlying producer price pressures that excludes food, energy and trade services rose 0.3 percent last month. The so-called core PPI edged up 0.1 percent in May.
In the 12 months through June, the core PPI advanced 2.7 percent after increasing 2.6 percent in May. Manufacturers have been facing a rise in the cost of inputs, but so far have not passed on most of the increases to consumers.
Inflation is gradually rising against the backdrop of a labor market that is viewed as being near or at full employment.
The Fed’s preferred inflation measure, the personal consumption expenditures (PCE) price index excluding food and energy, hit the U.S. central bank’s 2 percent target in May for the first time in six years.
The Fed raised
