After yesterday's report showing the biggest increase in U.S. consumer prices in thirteen years, the Labor Department released a report on Wednesday showing U.S. producer prices also jumped by much more than expected in the month of June.
The Labor Department said its producer price index for final demand surged up by 1.0 percent in June after climbing by 0.8 percent in May. Economists had expected producer prices to rise by 0.6 percent.
The bigger than expected increase in producer prices was largely due to an advance in prices for services, which accounted for nearly 60 percent of the jump by the headline index.
Prices for final demand services climbed by 0.8 percent in June, as prices for trade services spiked by 2.1 percent and prices for transportation and warehousing services increased by 0.9 percent.
Excluding prices for food, energy, and trade services, core producer prices increased by 0.5 percent in June following a 0.7 percent advance in the previous month.
The report also showed the annual rate of producer price growth accelerated to 7.3 percent in June from 6.6 percent in May, reaching the highest level since 12-month data were first calculated in November of 2010.
Core producer prices were up by 5.5 percent year-over-year in June, reflecting an uptick from the 5.3 percent jump in May.
The annual surge in core prices also reflected the largest advance since 12-month data were first calculated in August of 2014.
"We believe this will be the peak in the pace of wholesale inflation as base effects ease," said Mahir Rasheed, U.S. Economist at Oxford Economics.
"But ongoing friction between supply and demand will continue to keep prices sticky through 2021 and into 2022," he added. "This supports our call that the Fed will begin QE tapering in early 2022."
On Tuesday, the Labor Department released a separate report showing consumer prices saw the biggest monthly increase in thirteen years in the month of June.
The Labor Department said its consumer price index jumped by 0.9 percent in June after climbing by 0.6 percent in May. Economists had expected consumer prices to rise by 0.5 percent.
The bigger than expected increase in consumer prices reflected the biggest advance since prices surged up by 1.0 percent in June of 2008.
Excluding food and energy prices, core consumer prices still jumped by 0.9 percent in June following a 0.7 percent increase in May. Core prices were expected to rise by 0.4 percent.
The annual rate of consumer price growth accelerated to 5.4 percent in June from 5 percent in May, reaching the highest level since a matching spike in August of 2008.
Core consumer prices were up by 4.5 percent year-over-year in June, reflecting an acceleration from the 3.8 percent jump in May. Core prices saw the biggest annual increase since November of 1991.