MNI DATA ANALYSIS:June PPI Rises 0.3%, +0.3% Ex. Food, Energy>

--June PPI Ex. Food, Energy, Trade +0.3%; Trade Services +0.7%

--PPI +3.4% Y/Y Vs +3.1% In May; Ex Food, Energy +2.8% Vs +2.4%; 7Y High

By Kevin Kastner, Sara Haire, and Shikha Dave

     WASHINGTON (MNI) - Final demand PPI rose by 0.3% in June, a bit 

stronger than the 0.2% gain expected, with an as-expected 0.3% gain 

outside of food and energy prices, data released by the Bureau of Labor 

Statistics Wednesday showed. 

     The overall month/month rise was much larger than the 0.1% gain 

seen in June 2017, which resulted in another jump in the year/year rate. 

Likewise, PPI ex food and energy saw a sharp gain in its year/year rate. 

These gains, both to their strongest pace since 2011, only serve to 

support a gradual rate hike path for the FOMC. 

     The personal consumption price measure in the data, which some 

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

rose by 0.3% overall, by 0.5% ex. food and energy, and were up 0.3% also 

excluding trade services, suggesting an upside risk to the PCE inflation 

data. 

     Within the core, there were generally upward movements in a number 

of categories. Passenger car prices rose 0.4%, while light truck prices 

rose 0.6%. Overall final demand services prices were rose 0.7%. 

--ENERGY UP, FOOD DOWN

     Energy prices rose 0.8% in June after a 4.6% jump in May, led in 

June by a 6.4% jump in diesel fuel prices. Electric power prices rose 

0.4% and gasoline prices were up 0.5%, while residential natural gas 

prices fell 1.9%. 

     Food prices fell 1.1%, with lower seen across a number of 

components, particularly vegetables and beef. 

     Trade services prices rose 0.7% in the month, while the PPI core 

rate the BLS prefers, which excludes the change in trade services as 

well as food and energy, also rose 0.3% in June. 

--Y/Y INFLATION JUMPS 

     The year/year rates for these measures showed strong acceleration. 

Overall PPI was up 3.4% year/year in June after a 3.1% year/year rise in 

May, the largest gain since November 2011, as the headline index was up 

only 0.1% in June 2017. 

     At the same time, the year/year rate for PPI excluding food and 

energy jumped to 2.8% from 2.4% in May, the highest since September 

2011, while the year/year rate for PPI excluding food, energy and trade 

services ticked up to 2.7% from 2.6%. 

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

[TOPICS: MAUDS$,M$U$$$,MT$$$$,MAUDR$]