US producer prices rise at slowest pace in nearly three years

US producer prices barely increased in June from a year earlier, rising at the slowest pace in nearly three years and extending a months-long deceleration in pipeline inflationary pressures.

The producer price index for final demand rose 0.1% from a year earlier, according to data out Thursday from the Bureau of Labour Statistics. On a monthly basis, the PPI also increased 0.1% after falling in the prior month.

Normalising global supply chains, stabilising commodity prices, and a broader shift in consumer demand toward services and away from goods have generally helped alleviate inflationary pressures at the producer level.

Services costs edged higher despite a sharp decline in transportation and warehousing costs. Prices of goods, meanwhile, were little changed. That’s flowed through to consumers in the form of lower prices — something known as deflation. Goods costs fell 4.4% from a year ago, the biggest decline in more than three years.

Excluding the volatile food and energy components, the so-called core PPI also barely rose from May and was up 2.4% from a year ago. The annual gain was the smallest since January 2021.

The figures come just a day after separate data showed consumer prices rose in June at the slowest pace since 2021. While a July interest-rate hike is all but assured, the rapid descent in price growth — now just a third of its 2022 peak rate — offered fresh hope that the Federal Reserve can soon wrap up the most aggressive tightening campaign in decades.

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