By Geoffrey Smith
Investing.com -- U.S. producer prices rose by more than expected in June, piling more pressure on the Federal Reserve to raise interest rates to bring inflation down.
The price of goods leaving the factory gate rose by 1.1% from May, more than the 0.8% expected, and an acceleration from 0.9% in May. May's figures, too, were revised up a shade.
The usual suspects of gasoline and other energy costs were again prominent. Excluding such volatile components, the core PPI rose only 0.4%, a slight slowdown from May's 0.6%.
As such, the annual rate of producer price inflation rose to 11.3%, having fallen for each of the last two months. The annual core rate fell to 8.2% from an upwardly revised 8.5%.
Producer prices are often seen as an indicator of 'pipeline pressure' in the broader inflation picture, a sneak peek into tomorrow's consumer inflation figures. That correlation has broken down somewhat, however, as final prices have come to be influenced more by the price of imports. Even so, the numbers make for more bad reading for the Federal Reserve, a day after consumer inflation hit a 41-year high of 9.1%.
Separately, the Labor Department announced that initial jobless claims crept up to a five-month high of 244,000 last week, suggesting that the pace of layoffs may be picking up and that the process of rehiring is not going quite as smoothly as in previous months.