US producer prices dragged by cheaper services
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The news: US producer prices increased by a weaker than expected 0.1% in July, falling short of the expected 0.2% rise as cheaper services tempered the impact of higher energy prices in the cost of goods.
The numbers: The Bureau of Labor Statistics said the PPI for final demand rose 0.1% in July, lower than the 0.2% increase in June.
Services costs decreased 0.2%, offsetting a rebound in the prices of goods, which climbed 0.6%, the most since February, driven by a 1.9% increase in energy costs and a pickup in food costs.
Over the past year, the Producer Price Index (PPI) rose 2.2%, down from June’s 2.7%.
The context: Economists saw the data as supportive of a rate cut by the Fed, although the wholesale inflation figures come ahead of the more closely monitored consumer price index, which is expected to show a modest 0.2% rise on Wednesday’s data.
What they said: "Producer price increases cooled this month which is good news for the Fed's inflation fight, but there is no PPI deflation, so Fed officials do not have to rush to judgment and bring rate cuts forward because the economy is headed downhill," Christopher Rupkey, chief economist at FWDBONDS, told Reuters.
The sources: US Bureau of Labor Statistics , Bloomberg , Reuters
