WASHINGTON – A gauge of U.S. business prices ticked up in June, pointing to modest inflation pressures.
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The producer-price index for final demand, which measures changes in the prices that U.S. companies receive for their goods and services, increased a seasonally adjusted 0.1% in June from a month earlier, the Labor Department said Thursday.
Economists surveyed by The Wall Street Journal had expected the index to remain flat last month.
From a year earlier, prices advanced 2%.
The report showed food prices rose 0.6% in June, led by a 5.5% increase in the price of meat. Energy prices fell 0.5%.
The index for core prices, which excludes the often-volatile prices for food and energy, grew 0.1% in June, in line with economist expectations. From a year earlier, core prices were up 1.9%.
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Changes in PPI aren't necessarily a reflection of what consumers pay, as the inflation gauge looks at prices businesses receive from customers, including consumers, other businesses and governments. But in general, PPI readings follow the same trends as other major inflation gauges.
The personal-consumption expenditures price index, the Fed's preferred inflation gauge, rose 1.4% in May from a year earlier, the Commerce Department previously reported. That was a slowdown from a 2.1% annual increase in February, the first time in five years the index's annual increase poked above the Fed's ?2% annual inflation ?target.
?Inflation remaining persistently below the ?Fed's target could present a challenge to policy makers considering when next to raise the central bank's benchmark rate. Fed officials have raised the rate twice this year, and have penciled in one more increase, though no move is expected at a meeting later this month.
Fed Chairwoman Janet Yellen said in congressional testimony Wednesday it would be premature to judge that the economy was not on the path to 2% inflation over the next couple of years, reiterating her view that an increasingly tight labor market would put upward pressure on wages and prices. Still, she noted the Fed would change course if inflation continued to illustrate weakness.
"We're watching this very closely and stand ready to adjust our policy if it appears that the inflation undershoot will be persistent," Ms. Yellen said.
The Labor Department's producer-price index report can be accessed at: http://www.bls.gov/news.release/ppi.nr0.htm
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(END) Dow Jones Newswires
July 13, 2017 08:45 ET (12:45 GMT)