US producer prices rose in June

USA stocks were trading higher on Thursday, extending their record-setting rally for a fourth day, even as the Bank of England surprised investors by leaving interest rates unchanged.

The producer-price index, measuring what companies pay other firms for items ranging from gasoline to furniture, rose 0.5% in June from a month earlier, the biggest increase in a year, the Labor Department said Thursday. The index had been expected to increase by 0.3 percent.

Economists polled by Reuters had forecast initial claims rising to 265,000 in the latest week.

As energy costs stabilize and the retraining influence of a strong dollar dissipates, a slowly improving economy will probably lead to a more sustained pickup in price pressures.

Data later this month is expected to show a rebound in economic activity in the second quarter after growth slowed to a 1.1 percent annualised rate at the start of the year.

“PPI inflation is in line with expectations of a gradual firming in pipeline price pressures in the USA”, said Barclays analyst Blerina Uruci.

A modest rebound in oil prices this year is largely responsible for nudging wholesale inflation higher. “There’s a bit of a pickup in wages”.

What’s more, core prices have barely budged in 2016.

United States producer prices recorded their biggest gain in a year in June as the cost of energy products and services increased, pointing to a steady build-up in inflation as the drag from a strong dollar and lower oil prices fades. Those costs were up 1.3 percent from June 2015.

Another report today showed producer prices recorded their biggest gain in a year in June on rising costs for energy products and services.

The Labor Department is scheduled to release its more closely watched monthly report on consumer price inflation on Friday. That was the largest one-month jump since a similar rise in May 2015. 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.

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