WASHINGTON: US wholesale prices rose more than expected in June, with core prices suggesting a broad pickup in inflationary pressures at the factory gate, official data showed Thursday.
The Labor Department said its producer price index rose 0.5 percent after a 0.4 percent increase in May. Analysts had forecast 0.3 percent.
"Evidence is mounting that inflationary pressures are developing," said Ryan Sweet of Moody's Analytics.
"This isn't surprising as slack in the economy continues to diminish and energy has shifted from a sizable weight to a support for headline measures of inflation, including the PPI."
Wholesale costs rose 0.3 percent year-over-year in June, the largest 12-month gain since December 2014.
Energy prices jumped 4.1 percent from May as crude oil prices rebounded from a first-quarter slump. Gasoline prices were a big driver, surging 9.9 percent. Food prices rose 0.9 percent.
Stripping out food and energy prices, the PPI rose 0.4 percent month over month in June, reflecting a wide array of price gains from export services and transportation to manufacturing equipment.
"PPI inflation is in line with expectations of a gradual firming in pipeline price pressures in the US," said Barclays analyst Blerina Uruci.
The government publishes its consumer price index for June on Friday, expected to show consumer inflation picking up from May.
The Federal Reserve has been waiting for clear signs of inflationary pressures to lift ultra-low interest rates.
"The days of falling prices are pretty much over and the labor market is strengthening, which raises the question, is anyone at the Fed paying attention?" asked Joel Naroff at Naroff Economic Advisers.
"Signs that the economy is rebounding would matter if job growth is sustained in July and August and inflation continues to trend upward," he said.
The Fed holds its next monetary policy meeting on July 26 and 27. Analysts widely expect the central bank will hold fire on raising rates, in part because of the uncertainties created by Britain's vote last month to exit the European Union.
Bat Naroff said a rate hike could be in play in September.
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