Re-cork the champagne?

24 hours after blessing the Fed with the most favorable read on consumer price growth since the onset of America’s inflation nightmare, the BLS said producer prices rose twice as fast as expected in June from the prior month. Insult to injury: May’s readings were revised meaningfully higher.

Specifically, the headline PPI gauge rose 0.2% for June versus expectations for a 0.1% gain. May’s MoM print was revised to unchanged from an initially reported 0.2% decline.

Stripping out food and energy, producer prices rose 0.4% last month, double the expected increase, while May’s core print was revised to show a 0.3% gain (from unchanged).

Obviously, this doesn’t negate the good vibes from the CPI release, nor does it necessarily reduce the odds of a September Fed cut. But it will temper the most dovish expectations for the June PCE prices update later this month.

The PPI services gauge rose 0.6% in June, the third overtly warm MoM print of 2024 and double May’s pace. The monthly increase was due almost entirely to trade services. On the goods side, both the food and energy gauges retreated from May.

I wouldn’t want to make too much of this release, but do note: The 12-month increase on the headline PPI gauge was 2.6%.

That was meaningfully higher than the 2.3% consensus expected, and the warmest read in 15 months.

For its part, the core gauge rose 3% YoY, 0.5ppt above estimates and the quickest YoY pace since April of 2023.