June Producer Prices Remain Flat Amid Decline in Services Costs

12:43 PM EDT, 07/16/2025 (MT Newswires) -- US producer prices remained unchanged last month amid an increase in wholesale costs of goods and a decline in the services component, the Bureau of Labor Statistics reported Wednesday, a day after data showed an uptick in consumer inflation.

The producer price index held steady on a seasonally adjusted basis in June, following an upwardly revised growth of 0.3% the month before, according to the BLS. A survey compiled by Bloomberg pointed to a gain of 0.2%.

"Softening demand for travel weighed heavily on the (PPI) in June, keeping the headline and core measures unchanged," Oxford Economics Senior US Economist Matthew Martin said in remarks e-mailed to MT Newswires. "Tariff-exposed goods such as household appliances posted strong gains, but apparel and toys were mostly unchanged."

The PPI index for final demand goods moved up 0.3% in June, marking an acceleration from a 0.1% rise in the month prior, the BLS data showed. Food prices within the goods category were up 0.2%, while energy costs gained 0.6%. The services component fell 0.1% last month after rising 0.4% in May.

The PPI report follows Tuesday's data showing that consumer inflation in the world's largest economy accelerated last month at the fastest pace since January, with analysts saying there were signs of tariffs driving prices higher.

"Consumer prices picked up as energy prices rose and as some of the tariff increases began filtering into the economy," Stifel Chief Economist Lindsey Piegza said in a separate client note Wednesday. "Prices for goods that are more sensitive to a rise in levies -- furniture, apparel, toys, and appliances -- for example, accelerated at the end of the second quarter."

Annually, producer prices growth decelerated to 2.3% in June from the previous month's pace of 2.7%, lagging analysts' estimate for a 2.5% rise.

"With the CPI and PPI components in hand, our forecast is for the (personal consumption expenditure) headline and core deflator to rise 0.4% (month over month) in June," Martin said. "We expect the Federal Reserve to remain on pause until December as the upward pressure on core goods becomes more apparent."

Markets widely expect the central bank's Federal Open Market Committee to again hold interest rates steady later this month, while the odds of a 25-basis-point cut in September fell to 53% Wednesday from 66% a week ago, according to the CME FedWatch tool.

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