JULY 13, 2020 – PRODUCER PRICE INDEX FALLS UNEXPECTEDLY IN JUNE
US producer prices fell 0.2 percent in June after rebounding 0.4 percent in May. The 12-month PPI is down 0.8 percent. The US Economy continues to face depressed demand as the Coronavirus epidemic continues its hold on the country. Economists expected the PPI to climb by 0.4 percent in June, and fall by only 0.2 percent for the last year. If there is any good news, it’s that producer inflation moved up a bit last month.
“The message for Fed officials, if they needed convincing at all, is that the worst economy since the Great Depression is keeping inflationary pressures on the back burner for now and that interest rates will need to remain at very low levels for the next few years at a minimum,” said Chris Rupkey, chief economist at MUFG in New York.
The Fed uses the core personal consumption expenditures (PCE) price index for its 2 percent inflation target. The core PCE price index increased 1 percent on a year-over-year basis in May, the smallest rise since December 2010. Core PCE price index data for June will be released at the end of July.