Preview: Due July 15 - U.S. June PPI - Some fading from recent strength

We expect a substantial 7.0% fall in energy prices, led by gasoline, though still only a partial reversal of May’s 10.7% increase, which followed gains of 7.5% in April and 10.4% in March. We expect food to remain quite firm with a rise of 0.5%, similar to a 0.6% increase seen in May.

We expect goods ex food and energy to rise by 0.4%, slower than gains of 0.8% in May and 0.7% in April, but stronger that the 0.3% gains seen in both February and March. The gains of the last two months were inflated by surges in industrial chemicals, by 5.1% in April and 7.6% in May, which we do not expect to extend much further, though a reversal is unlikely to come as early as June. We expect overall goods prices to fall by 0.9% on energy, after a rise of 2.8% in May.

PPI service prices rise by 0.3% in May after a 0.7% rise in April, with trade prices reversing most of an April increase. We assume a fairly neutral contribution from trade in June. Excluding trade May’s service detail was stronger than April’s, despite transport and warehousing slowing to a 2.6% rise from 2.8% rise in April. Further slowing here is likely in June with transport sensitive to energy. Other services picked up to a 0.7% rise in May after a rise of only 0.1% in April, with some financial services particularly strong. June’s service detail may show gains close to 0.4% in all three components.

We see yr/yr growth at 6.3% for overall PPI in June, marginally down from May’s 6.5% which was the highest since December 2022. Ex food and energy we expect the yr/yr pace to pick up to 5.2% from 4.9%, reaching its highest since December 2022. Ex food, energy and trade we expect yr/yr growth to increase to 5.3% from 5.1%. This would be the highest since October 2022.