RTTNews - Wholesale prices jumped last month, suggesting that inflation pressures could be building. This has been a persistent fear since the government began pumping money into the economy to help fight the recession.
Energy prices helped lead the rise, but even without this volatile sector, wholesale inflation accelerated in June.
The U.S. Labor Department revealed that producer prices, a key measure of wholesale inflation, rose 1.8 percent in June. This followed a rise of 0.2 percent that took place in May and an advance of 0.3 percent in April.
The advance last month represented the biggest month-over-month gain since November of 2007.
Economists had predicted an advance of about 1 percent for the month.
Core producer prices, which exclude the impact of the volatile food and energy sectors, climbed 0.5 percent last month. This after a decline of 0.1 percent in May and a rise of 0.1 percent in April.
Core prices were expected to rise 0.1 percent.
Energy prices jumped in June, climbing by 6.6 percent for the month. This followed a 2.9 percent increase in the previous month.
Gasoline prices were up 18.5 percent, while home heating oil prices climbed 15.4 percent.
A rise in car and truck prices gave a boost to the core number. Prices for passenger cars were up 2 percent in June, after rises of 0.1 percent and 0.2 percent in the previous two months, respectively.
On Wednesday, the government is scheduled to release its report on consumer prices, providing a look at retail inflation. This is considered more important for the overall economy, as consumer prices are the ones that impact the average person.
Ahead of the data, economists were looking the rise in consumer prices to accelerate, though core inflation was expected to remain tame.
The question for the consumer price report will be whether the sharp increases in producer prices has filtered down to the retail level, or whether companies are choosing to absorb those increased prices, taking a hit on margins.
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