**MNI 5 Things: June PPI Above-Expected +0.3%, Core +0.3%>

--5 Things We Learned From The June PPI Data

By Kevin Kastner, Sara Haire, and Shikha Dave

     WASHINGTON (MNI) - The following are the key points from the 

Producer Price Index data for June released by the Labor Department 

Wednesday: 

     - The June PPI data were slightly stronger than reported in May, 

with a 0.3% gain for the overall figure rather than the 0.2% rise 

expected. However, a 0.3% gain for the ex. food and energy reading was 

as expected. PPI ex. trade services, food, and energy was also up 0.3% 

after 0.1% gains in the previous two months. The data suggest wholesale 

inflation is gaining steam, especially when sharp gains in the year/year 

rates are considered. 

     - The solid monthly gain for June 2018, much larger than the 0.1% 

gain in June 2017, lifted the annual rate of overall inflation. Overall 

PPI is now up 3.4% y/y vs 3.1% in May, the strongest pace since November 

2011. At the same time, ex food and energy PPI moved up to 2.8% y/y vs 

2.4% in May (strongest since Sept 2011) and PPI ex food, energy and 

trade services is now up 2.7% y/y vs 2.6% in May. 

     - The personal consumption price measure in the data, which some 

analysts use as a preview measure for the CPI and PCE price data, rose 

0.3% overall and 0.5% excluding food and energy, strong positive factors 

for the other inflation data still to come for the month. Outside of 

food, energy and trade services, the personal consumption measure was up 

0.3%. The year/year rates for all three measures were above 2%. 

     - Energy prices posted a 0.8% increase in June after a 4.6% gain in 

May, with a 6.4% jump in diesel fuel prices a key factor, while gasoline 

prices rose 0.5%. Food prices fell 1.1% in the month on declines in a 

number of categories, while the volatile trade services component was up 

0.7% in June after a 0.9% gain in May. 

     - Within the core, passenger car prices were up 0.4% and light 

truck prices rose 0.6%. The overall picture for underlying inflation is 

the same as for overall inflation, that the pace is increasing and will 

continue to support gradual rate increases.

     ** MNI Washington Bureau: 202-371-2121 ** 

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