Prices paid to U.S. producers rose in June by more than forecast, indicating businesses continued to face strong inflationary pressures before a recent decline in commodities costs.

The producer price index for final demand increased 11.3% from June of last year and 1.1% from the prior month, Labor Department data showed Thursday. That followed upward revisions to the May figures. Three-fourths of the advance last month was due to goods, particularly energy.

Excluding the volatile food and energy components, the so-called core PPI climbed 0.4% from a month earlier and rose 8.2% from a year ago.

The median forecasts in a Bloomberg survey of economists called for a 10.7% year-over-year increase for the overall PPI and a 0.8% monthly advance.

While the figures show persistent cost pressures, producers are starting to find some relief as commodities prices come off the boil on concerns about the demand outlook. Over the last several weeks, measures of food, raw industrial materials and crude oil all fell sharply.

Nonetheless, it will probably take months before inflation moderates at the household level. A report Wednesday showed prices paid by consumers surged 9.1% in the year through June, the fastest pace in four decades. While retail gasoline and food costs may abate, prices for many services such as rents could stay elevated for longer.

The broad gain in the consumer price index likely strengthens the resolve of Federal Reserve policymakers to raise rates aggressively, despite some early signs that producer inflation is set to moderate.

Energy drove the June PPI increase, rising 10% from a month ago and including an 18.5% surge in gasoline costs.

Prices of goods rose 2.4% in June, the most in three months and of which nearly 90% was due to energy. Diesel fuel, electric power and motor vehicles were among other goods that advanced.

Services prices, meanwhile, rose 0.4% after a 0.6% increase a month earlier and reflected higher margins for food and alcohol retailers.

Producer prices excluding food, energy, and trade services, which strips out the most volatile components of the index, rose 0.3% from May, and 6.4% from a year ago. The annual advance was the smallest since October.

Costs of processed goods for intermediate demand, which reflect prices earlier in the production pipeline, increased 2.3% from a month earlier due to higher energy. Excluding foods and energy, these costs rose just 0.2%, a marked slowdown from the 1.6% rise in May and the smallest gain since November 2020.

Olivia Rockeman reports for Bloomberg News.

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