Wholesale Prices Remain Flat in July, Below Expectations
The Bureau of Labor Statistics reported that wholesale costs for goods and services were unchanged in July, contrary to forecasts of a 0.2% increase.
The latest economic indicator suggests that inflation may be easing, as wholesale prices remained flat in July. The Bureau of Labor Statistics reported that the producer price index, a measure of underlying inflation pressures, was unchanged for the month.
This is in contrast to the 0.2% increase that was forecast by the Dow Jones consensus estimate. The June figure was revised from a previously reported decline of 0.3% to a fall of 0.1%.
The core PPI, which excludes food and energy, rose 0.2%, below the forecast for a 0.3% gain. However, the core PPI excluding trade services increased 0.4%.
On an annual basis, the headline PPI increased 4.7% for the all-items index and 4.2% for core, according to unadjusted figures.
| Index | June | July | | --- | --- | --- | | Headline PPI | -0.1% | 0.0% | | Core PPI | -0.3% | 0.2% | | Core PPI excluding trade services | -0.4% | 0.4% |
The report follows several other indicators that suggest the rate of price increases is beginning to ease. This is after a ramp-up in inflation earlier this year, fueled by the Iran war and President Donald Trump's tariffs.
Chris Rupkey, chief economist at Fwdbonds, stated that "pipeline pressures at the lower stages of production are not adding to the inflation risks the consumer faces." He also noted that for a second consecutive month, PPI final demand prices have not gone up, adding to the cost of living crisis faced by Americans.
Services prices rose 0.2% for the month, driven by a 6.5% surge in portfolio management. Goods prices fell 0.7%, helped by a 3.1% decrease in energy, including a 5.7% slide in the gasoline index. Food prices fell 0.9% though core goods prices rose 0.1%.
Federal Reserve officials have been weighing the various inputs to the price picture as several key officials have been pushing for interest rate hikes to get inflation back to the central bank's 2% target.
The report comes after the BLS reported that the consumer price index rose just 0.1% in July, with falling energy prices helping to lower price pressures. However, the headline annual inflation rate of 3.4% was still well above the Fed's goal.
Core consumer inflation was considerably tamer, posting a 0.2% monthly gain and 2.5% annual rate that put the level back to where it was prior to the start of the war.
Market expectations have switched in recent days, with traders now pricing in a rate hike in October or December after putting heavy odds that the Federal Open Market Committee would move at its next meeting on Sept. 15-16.
In other economic news, initial jobless claims rose to a seasonally adjusted 209,000 for the week ended Aug. 8, up 9,000 from the prior period and above the 204,000 estimate.
