WASHINGTON (AP) – US wholesale prices soared an unexpected 0.6% in July, the biggest gain since October 2018, as energy prices moved sharply higher.
The Labor Department said Tuesday that the jump last month in its producer price index – which measures inflation before reaching consumers – followed a 0.2% drop in June and an uptick of 0.4% in May. The increase last month was about twice what economists had expected.
Large energy prices shot up 5.3% in July, including a 10.1% increase in petrol prices. Food prices slipped 0.5%. Excluding volatile food and energy prices, so-called core production prices rose 0.5% last month.
Last year, production prices were down 0.4%, and core prices were up 0.3%. Inflation has been kept in check by the sharp recession caused by the outbreak of the coronavirus and the resulting confinement and fear that has kept Americans away from restaurants, planes and shopping malls. Producer prices for airline services rose 7% last month.
“Short-term inflation readings are likely to remain mutated in the coming months in response to persistently weak demand and insufficient excess capacity,” Rubeela Farooqi, chief economist at High Frequency Economics, wrote in a research report.
