U.S. June Producer Price Index at Annual 2.3%… Stable on Lower Service Costs

Korea Economic Daily

Summary

The U.S. Producer Price Index (PPI) for June was reported at an annual 2.3% with no change from the previous month.
It was reported that companies have not yet reflected the tariff increases in product prices, so wholesale price data appeared stable.
Many economists stated that if companies incorporate higher trade costs into product prices in the future, inflation is expected to rise gradually.

Companies Yet to Reflect Tariff Hikes in Product Prices

In June, the U.S. producer price index remained unchanged from the previous month, as a sharp decline in travel service costs offset the rise in product prices.

On the 16th (local time), the Bureau of Labor Statistics announced that the June Producer Price Index (PPI) recorded an annual increase of 2.3%, unchanged from the previous month after a 0.3%p upward revision in May. This is the lowest level since September.

The core PPI, which excludes food, energy, and trade, also was unchanged from the previous month, marking an annual increase of 2.5%. This is the smallest annual gain since the end of 2023.

Final demand service prices, which had increased by 0.4% P in the previous month, fell by 0.1%p in June. Final demand goods prices rose by 0.3% in June, marking the largest gain.

The PPI report was released after the June Consumer Price Index, which indicated that tariff hikes have affected various items such as furniture, home appliances, and recreational goods.

So far this year, inflation has remained moderate, but many economists expect that as companies begin to pass on higher trade costs to product prices, inflation will gradually increase from the summer.

According to Bloomberg, the latest wholesale price data suggests that manufacturers are currently approaching the passing on of U.S. tariff increases to customers cautiously. This data shows that after a surge in wholesaler and retailer margins in May, there was little change in June.

Kim Jeong-a, contributing reporter kja@hankyung.com