WASHINGTON, July 14 (Reuters) - U.S. producer prices accelerated in June, leading to the largest annual increase in more than 10-1/2 years, suggesting inflation could remain high as robust demand fueled by the economy's recovery from the COVID-19 pandemic strains the supply chain.
The report from the Labor Department on Wednesday followed on the heels of news on Tuesday that consumer prices increased by the most in 13 years in June. There are, however, signs that inflation is close to peaking. Underlying producer prices rose at a moderate pace on a monthly basis in June.
Federal Reserve Chair Jerome Powell told a congressional hearing on Wednesday that "inflation has increased notably and will likely remain elevated in coming months before moderating." Powell has long maintained that high inflation is transitory, a view shared by most economists and the White House. read more
The producer price index for final demand increased 1.0% last month after rising 0.8% in May. A 0.8% jump in the cost of services accounted for nearly 60% of the increase in the PPI. Services rose 0.6% in May. Goods prices climbed 1.2% after accelerating 1.5% in the prior month.