U.S. Core Producer Prices Accelerate After July Slowdown

U.S. Core Producer Prices Accelerate After July Slowdown

Bloomberg  | Sep 11, 2019 10:21

U.S. Core Producer Prices Accelerate After July Slowdown

(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. 

A measure of underlying U.S. producer prices that excludes food and fuel picked up in August after posting its smallest gain in two years, indicating inflation may be starting to stabilize.

So-called core producer prices increased 2.3% in August from a year earlier, topping the Bloomberg survey median forecast, following a 2.1% gain, a Labor Department report showed Wednesday. Including food and energy, the index rose 0.1% from July and 1.8% from August 2018.

Key Insights

  • The report, which measures wholesale and other business selling costs, is monitored by analysts to assess the potential of price pressures at the consumer level. Since the end of 2018, annual producer price gains have slowed as a sluggish global economy, exacerbated by the U.S.-China trade war, has limited demand for inputs.
  • Tame inflation, at the producer and consumer levels, gives Federal Reserve policy makers leeway to reduce their benchmark interest rate for a second time this year when they meet next week.
  • The report showed wholesale prices of goods other than food and energy were unchanged in August from a month earlier, while services for final demand climbed 0.3%, led by increases in gaming receipts, guestroom rentals and insurance.
  • The data also showed the costs of arranging freight and cargo shipments surged 4.8% from July, a record in data back to 2009 and likely reflecting the impact on supply chains from tariffs. President Donald Trump escalated the U.S.-China trade war at the beginning of August, announcing tariffs on an additional batch of Chinese goods before escalating those duties before they took effect.
  • Fed policy makers are expected to lower interest rates 25 basis points next week amid tepid inflation, ongoing trade tensions and slowing economic growth at home and abroad.
Get More

  • Producer prices excluding food, energy, and trade services -- a measure preferred by economists because it strips out the most volatile components -- rose 0.4% from the prior month, the most since April. They climbed 1.9% from a year earlier after a 1.7% annual increase in July that was the smallest since January 2017.
  • Energy prices dropped 2.5% from the prior month, while food costs declined 0.6%, the most since January.
(Adds graphic.)

Related News

Latest comments

Add a Comment
Please wait a minute before you try to comment again.
Discussion
Write a reply...
Please wait a minute before you try to comment again.

Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

English (USA) English (UK) English (India) English (Australia) English (South Africa) English (Philippines) English (Nigeria) Deutsch Español (España) Español (México) Français Italiano Nederlands Português (Portugal) Polski Português (Brasil) Русский Türkçe ‏العربية‏ Ελληνικά Svenska Suomi עברית 日本語 한국어 中文 香港 Bahasa Indonesia Bahasa Melayu ไทย Tiếng Việt हिंदी
Sign out
Are you sure you want to sign out?
NoYes
CancelYes
Saving Changes

+