July 14, 2009: Highlights Of Low Points In U.S. Economy

July 14, 2009 6:27 p.m. EST

Washington, D.C. (AHN) - Much to the U.S. consumers' chagrin, the price of produced goods rose much more than expected in June, a bad sign for the consumer price index due out Wednesday.

The Labor Department reported Tuesday that the Producer Price Index (PPI) for June rose 1.8 percent. The increase follows a small 0.2 percent rise in April and is double the 0.9 percent increase economists had estimated.

As the economy tries to work its way out of recession and retailers struggle to hang on until consumer spending rebounds, an increase in the cost of finished goods would be an additional burden.

According to the Labor Department's report, the increase was not just due to energy as seen in the past rather it was a broad-based rise.

Though energy did rise 8.9 percent due to a 26 percent surge in jet fuel, the price for nondurable manufacturing materials jumped 4.6 percent after declining the previous month.

The index for food and feeds posted a 1.3 percent increase, rising for the second consecutive month.

The rise in input costs will most likely pressure prices on the consumer end. The government is set to release consumer price index data before the opening bell Wednesday.

Elsewhere, the second largest PC maker, Dell said that its profits may be hurt this quarter due to shrinking margins. The rising price of components and a tough end product sales market have eroded margins, according to the company.