Wholesale prices in the U.S. climbed more than forecast in June as the cost of fuel picked up.
The 0.4 percent increase in the producer-price index followed a 0.5 percent gain in May, Labor Department figures showed Wednesday in Washington. The median forecast of 70 economists surveyed by Bloomberg called for a 0.2 percent advance. Costs fell 0.7 percent over the past 12 months.
A broad pickup in prices would help strengthen the case for Federal Reserve policy makers to start raising interest rates this year, as Chair Janet Yellen has indicated could be appropriate. The plunge in oil costs last year may wring itself out of the data in the coming months, helping to boost the inflation figures further.
“The profile of inflation heading into the second half of the year will actually look quite a bit more favorable,” Gennadiy Goldberg, a U.S. strategist at TD Securities USA LLC in New York, said before the report. That should work in the Fed’s favor, because “it’s much easier to communicate the need for a rate hike when inflation is starting to climb.”
Projections in the Bloomberg survey ranged from a drop of 0.2 percent to a 0.5 percent gain.
Energy expenses rose 2.4 percent last month, paced by higher gasoline costs.
Food prices increased 0.6 percent in June, reflecting a record 85 percent surge in the cost of chicken eggs as the bird flu epidemic crimped supply.
Wholesale prices excluding food and energy increased 0.3 percent, compared with the 0.1 percent gain seen by the median forecast of economists surveyed. It followed a 0.1 percent increase in May. Those costs were up 0.8 percent from June 2014.
Also eliminating trade services to arrive at a reading that economists at banks such as Morgan Stanley prefer because it excludes one of the report’s most volatile components, wholesale costs also climbed 0.3 percent last month after falling 0.1 percent.
The produce price gauge is one of three monthly inflation reports released by the Labor Department, which also publishes the import cost measure and the consumer price index, which is expected on July 17.
A report Tuesday showed the cost of goods bought abroad dropped in June, restrained by cheaper automobiles. The import-price index declined 0.1 percent last month after advancing 1.2 percent in May, according to Labor Department figures. Import prices were down 10 percent from the year before.
As part of their dual mandate, Fed policy makers are keeping a close watch on inflation trends. The personal consumption expenditures index, the Fed’s preferred inflation gauge, rose 0.2 percent in May from a year earlier and has been below the Fed’s 2 percent goal since May 2012.
Yellen expects “that it will be appropriate at some later this year to take the first step to raise the federal funds rate and thus begin normalizing monetary policy,” she said in a speech last week in Cleveland. She also added a note of caution, saying that “the course of the economy and inflation remains highly uncertain, and unanticipated developments could delay or accelerate this first step.”
Yellen on Wednesday begins her semi-annual monetary policy testimony to lawmakers, who may pepper with questions about the economic and monetary policy outlook.