Upward Trend of Wholesale Prices Temporary, Economists Say
by Christina Lee on July 15th, 2009
The Bureau of Labor Statistics found that wholesale prices rose higher in June than predicted by economists, to the highest level seen in nearly two years.
After incremental increases in April and May, wholesale prices – as measured by the producer price index – rose by 1.8 percent, or twice as high as expected. Just as seen in November 2007, when wholesale prices rose by 3.2 percent, rising energy costs made up most of this increase. Gasoline prices alone rose by 18.5 percent last month.
But, without the consideration of food and energy costs, wholesale prices would have increased by just 0.5 percent. Prices for cosmetic and toilet preparations, in addition to soaps and synthetic detergents, had risen incrementally after falling in May.
This month’s increase has already scared Wall Street a bit, as shown through yesterday’s declining stocks. But economists remain assured that June’s wholesale price increase is only a momentary spike.
Brian Bethune, IHS Global Insight economist, predicts that prices will level off in July, as he told the Associated Press. Besides, with the current economy, companies still cannot justify jacking up their own prices to match.
Wholesale prices also may have slowly climbed in 2009, but they still add to an overall decline of 4.6 percent over the past 12 months.