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US producer prices up 0.6% in July, biggest jump since 2018

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FILE – In this Aug. 27, 2013, file photo, workers load large containers of nectarines for sorting at Eastern ProPak Farmers Cooperative in Glassboro, N.J. U.S. wholesale prices fell 0.6% in February 2020, the biggest decline in five years, led by a sharp drop in energy costs. The Labor Department said the decline in its producer price index, which measures price pressures before they reach the consumer, followed a 0.5% rise in January. It was the sharpest decline since a similar 0.6% drop in January 2015. (AP Photo/Mel Evans, File)

WASHINGTON (AP) — U.S. wholesale prices shot up an unexpected 0.6% in July, biggest gain since October 2018, as energy prices moved sharply higher.

The Labor Department said Tuesday that the jump last month in its producer price index — which measures inflation before it reaches consumers — followed a 0.2% drop in June and a 0.4% uptick in May. The increase last month was about twice what economists had expected.

Wholesale energy prices shot up 5.3% in July, including a 10.1% surge in gasoline prices. Food prices slid 0.5%. Excluding the volatile food and energy prices, so-called core producer prices rose 0.5% last month.

Over the past year, producer prices are down 0.4%, and core prices are up 0.3%. Inflation has been held in check by the sharp recession caused by the coronavirus outbreak and the resulting lockdowns and fear that have kept Americans away from restaurants, airplanes and shopping centers. Producer prices for airline services plummeted 7% last month.

“Core inflation readings will likely remain muted over coming months in response to ongoing weak demand and ample excess capacity,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, wrote in a research report.

Copyright 2020 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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