WASHINGTON, July 16 (Reuters) - U.S. producer prices were unexpectedly unchanged in June as a tariff-driven increase in the cost of goods such as communication and related equipment was offset by softening demand for travel services.

The weakness in the cost of services, if sustained, offers hope that the tariff-induced flare-up in inflation will not lead to broad-based price pressures in the economy.

Still, the increase in producer goods prices reported by the Labor Department on Wednesday was the latest indication that the sweeping tariffs announced by President Donald Trump in April were starting to lift inflation. The government reported on Tuesday that the Consumer Price Index increased by the most in five months in June, with tariff-sensitive categories posting solid rises.

A column chart titled "Monthly change in US Producer Price Index" that tracks the metric over the past year.

The data will likely keep the Federal Reserve in a cautious stance about resuming its interest rate cuts. Trump has demanded that the U.S. central bank start lowering borrowing costs now.

"The inflation threat is alive and very real and if this does not put a Fed rate cut in July out of the question, then nothing will," said Christopher Rupkey, chief economist at FWDBONDS. "Fed officials are unlikely to push for interest rate cuts unless they are trying to curry favor with the president."

The Fed is expected to leave its benchmark overnight interest rate in the 4.25%-4.50% range at its July 29-30 policy meeting. Minutes of the central bank's meeting last month, which were published last week, showed only "a couple" of officials said they felt rates could fall as soon as this month.

The unchanged reading in the PPI for final demand last month followed an upwardly revised 0.3% rise in May, the Labor Department's Bureau of Labor Statistics said. Economists polled by Reuters had forecast the PPI would rise 0.2% after a previously reported 0.1% gain in May.

The BLS said PPI data from February through May was revised "to reflect the availability of late reports and corrections by respondents."

In the 12 months through June, the PPI increased 2.3% after advancing 2.7% in May. Monthly goods producer prices increased 0.3% after gaining 0.1% in May.

U.S. stocks were mixed in mid-morning trading. The dollar rose against a basket of currencies. U.S. Treasury yields fell.

A line chart titled "Annual change in US Producer Price Index" that tracks the metric over the past 5 years.

BROAD INCREASE

More than half of the broad-based increase in final demand goods prices was due to a 0.3% advance in that category when food and energy was excluded. These so-called core goods prices rose 0.2% in May. They were boosted last month by a 0.8% jump in prices for communication and related equipment following a 0.4% rise in May.

Household furniture costs surged 1.0% after climbing 0.7% in the prior month. Home electronic equipment rose 0.8% after being unchanged in May. Passenger car prices rebounded 0.3%.

Some of the increases in wholesale goods prices mirrored similar rises in the CPI goods components.

Wholesale services prices slipped 0.1% after increasing 0.4% in May. A 4.1% decline in wholesale prices of hotel and motel rooms accounted for more than half of the drop in services. The cost of airline fares decreased 2.7%.

Bar chart showing contributions of different items to overall inflation.

An uncertain economic outlook has resulted in a consumer spending pullback, including on holiday travel. The number of foreign tourists visiting the U.S. has declined, partly in response to the Trump administration's immigration crackdown.

Portfolio management fees rebounded 2.2% in June. There were also increases in the prices of machinery, equipment, parts and supplies wholesaling, furniture retailing as well as apparel, jewelry, footwear and accessories retailing.

Economists said the June CPI report was likely the start of the tariff-induced increase in inflation from April's duties, but some of them expect slower services price growth because of softening demand for travel and hotel accommodation to partially offset the boost to inflation from tariffs.

Trump last week announced higher duties would come into effect on August 1 for imports from a range of countries, including Mexico, Japan, Canada and Brazil, and the European Union. Economists expect these tariffs will keep goods prices elevated through the end of the year.

With the PPI and CPI reports in hand, economists estimated the Personal Consumption Expenditures Price Index, excluding the volatile food and energy components, increased 0.3% in June after rising 0.2% in May. The so-called core PCE inflation was forecast to have advanced 2.7% on a year-over-year basis last month, matching the rise in May.

The core PCE price index is one of the inflation measures tracked by the Fed for its 2% target.

"We still think the bulk of the tariff pass-through is ahead of us, likely to occur over the summer and fall. However, with many strategies at companies' disposal, the pass-through may be lower than initially anticipated," said Oren Klachkin, financial market economist at Nationwide.