Key facts
- US producer prices for final demand fell 0.3% in June, the largest monthly drop since July 2022.
- US producer prices rose 5.5% year-on-year in June, down from 6.0% in May.
- Energy product costs declined 6.4% contributing to the overall PPI decrease.
- South Korea's import prices fell 4.4% in June, the fastest decline in 3.5 years.
- South Korea's export prices were flat month-on-month in June.
U.S. producer prices unexpectedly declined in June, signaling a continued retreat in inflation before recent geopolitical tensions escalated. The Producer Price Index for final demand dropped 0.3% last month, marking the largest decrease since July 2022, largely due to a 6.4% fall in energy product costs. This followed a downwardly revised 0.6% increase in May. In the 12 months through June, the PPI increased 5.5%, slowing from May's 6.0% rise.
Concurrently, South Korea's import prices experienced their steepest decline in three and a half years in June, falling 4.4% month-on-month. This was primarily driven by a 23% drop in Dubai crude oil prices. Raw material prices in South Korea decreased by 10.3% and intermediate goods by 3.2% in June. In contrast, South Korea's export prices remained flat month-on-month, as gains in electronics offset declines in oil products.
These figures suggest easing inflationary pressures globally. The U.S. Consumer Price Index also dropped 0.4% in June, with the annual increase slowing to 3.5%. Financial markets anticipate the Federal Reserve will hold interest rates steady this month, though a September hike remains a possibility. The recent collapse of a ceasefire between the U.S. and Iran in the Strait of Hormuz led to oil prices rising, potentially impacting future inflation data.