PPI Data Rises Slowly In June, Does This Sign The Fed's Job Is Done?

<p>&nbsp;Wholesale prices rose modestly by 0.1% in June, extending a streak of slow readings and suggesting inflation in the U.S. likely to continue to decline.</p><p><br /></p><p>Economists polled by the Wall Street Journal had even predicted a 0.2% increase in the producer price index. Wholesale costs often predict future inflation trends. Wholesale price increases over the past 12 months slowed to 0.1% from 1.1% in the previous month. That's the lowest reading since September 2020.</p><p><br /></p><p>A separate measure of wholesale prices that excludes volatile food and energy costs and trade margins was reported to have risen 0.1% last month based on released data.</p><p><br /></p><p>This increase in core prices over the past year slowed to 2.6% from 2.8%, marking the smallest increase since March 2021.</p><p><br /></p><p><br /></p><p>Weak consumer and wholesale inflation readings this week likely won't prevent the Federal Reserve from raising interest rates again in two weeks. The Federal Reserve is working to make sure it stops inflation and lowers prices more quickly.</p><p><br /></p><p>The PPI report describes the costs paid by the company for supplies such as fuel, packaging, etc. These costs are often passed on to customers at the retail level and provide an indication of whether inflation is rising or falling.</p><p><br /></p><p>Wholesale prices have slowed more quickly this year than consumer prices, perhaps a sign that inflation will ease faster than the Federal Reserve expects.</p><p><br /></p><p>However, it will take a few more months of weak inflation readings, at least, to prompt the central bank to conclude that its job is almost done. The Federal Reserve manages inflation by raising interest rates and slowing the economy.</p>