US producer prices fall in July, underlying inflation slows
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US producer prices unexpectedly fell in July amid a drop in the cost for energy products, and underlying producer inflation appears to be on a downward trend.
The producer price index (PPI) for final demand declined 0.5 per cent last month after climbing 1.0 per cent in June, the Labor Department said on Thursday (Aug 11). In the 12 months till July, the PPI increased 9.8 per cent after advancing 11.3 per cent in June.
There was a drop of 1.8 per cent in goods prices. They gained 2.3 per cent in June.
The cost of services rose 0.1 per cent after climbing 0.3 per cent in June.
Economists polled by Reuters had forecast the PPI would rise 0.2 per cent in July and increase 10.4 per cent on a year-on-year basis.
The government on Wednesday reported consumer prices were unchanged in July, helped by a drop in petrol prices after a surge earlier this year.
Excluding the volatile food, energy and trade services components, producer prices rose 0.2 per cent in July. The so-called core PPI increased 0.3 per cent in June. In the 12 months till July, the core PPI advanced 5.8 per cent after rising 6.4 per cent in June.
The Federal Reserve is mulling whether to raise its benchmark overnight lending rate likely by another 50 or 75 basis points at its next policy meeting on Sep 20-21, as it battles to cool demand and bring inflation back down to its 2 per cent goal.
The US central bank has raised its policy rate by 225 basis points since March. REUTERS
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