US producer prices edge up in July
Energy prices declined 0.6% in July after climbing 2.4% the month before, as food prices fell 0.1% following a 0.6% gain.
An increase of 0.4 per cent in services prices, which offset a fall of 0.1 per cent in the cost of goods, accounted for the increase in the PPI last month.
In the past 12 months through the end of July, the PPI has dropped 0.8% after it declined 0.7 through the end of June.
A key price gauge that the Fed monitors is up by just 0.3 percent over the 12 months ending in June, reflecting the big drop in energy prices that has occurred over the past year.
Economists forecast that the PPI would be edging higher by 0.1% in July and falling by 0.9% compared to one year ago.
The producer price index measures price changes from the perspective of the seller but generally tracks similar, closely watched measures of inflation for consumers.
U.S. producer prices rose for a third straight month in July, suggesting the drag on inflation from weaker oil prices was easing. It was the first decrease in the goods index since April. “On balance, we view the data as in line with our expectations and consistent with a firming in producer prices”, says Barclays.
China’s devaluation and “continued broad strength in the dollar against other currencies points to further, potentially substantial weakness in core goods prices in the months ahead”, Ted Wieseman, economist at Morgan Stanley, said in a note to clients. Import prices were down 0.9% during July.
MODERATE PRICES: In June, wholesale prices rose a modest 0.4 percent after being up 0.5 percent in May.
But inflation is running well below the Fed’s target. Wholesale chicken egg prices were down 24.2% during July after they had soared by a record 84.5% during June due to an outbreak of avian flu in certain areas of the country.
The gain in output reflected a 0.8 percent increase in factory production that was spurred by a 10.6 percent surge in motor vehicle output, the largest increase since September 2009.