Wholesale costs for goods and services were flat in July, the Bureau of Labor Statistics said Thursday, the latest positive sign for inflation.
The producer price index, a measure of underlying inflationary pressures, was unchanged this month after falling 0.1% in June, below the Dow Jones consensus estimate of 0.2%. The June figure has been revised from the previously announced 0.3% decline.
Core PPI, which excludes food and energy, rose 0.2% compared to expectations for a 0.3% rise. Core PPI, which excludes trade services, rose 0.4%.
On an unadjusted basis, the overall PPI rose 4.7% for the full index and 4.2% for the core index on an annual basis.
The report follows several other indicators that tell a similar story: Price increases are starting to ease after the Iran war and President Donald Trump’s tariffs accelerated inflation earlier this year.
After the news, stock market futures rose, but U.S. Treasury yields fell. Traders further reduced the likelihood that the U.S. Federal Reserve will raise interest rates in September.
“The net pressure of pipelines on the lower stages of production is not increasing the inflation risk faced by consumers,” said Chris Rupkey, chief economist at Forwardbonds. “The good news is that for the second month in a row, PPI final demand prices have not increased, further exacerbating the cost-of-living crisis facing Americans.”
Services prices rose 0.2% over the month, driven by a 6.5% rise in portfolio management, a category that could see significant increases in the first month of the quarter due to reporting requirements.
Commodity prices fell 0.7%, supported by a 3.1% decline in energy, including a 5.7% decline in the gasoline index. Core goods prices rose 0.1%, but food prices fell 0.9%.
Federal Reserve officials are weighing a variety of factors on price developments as several key officials push for rate hikes to bring inflation back to the central bank’s 2% target.
On Wednesday, the BLS reported that the consumer price index rose by just 0.1% in July as lower energy prices during the month helped reduce price pressures. But the key annual inflation rate of 3.4% remained well above the Fed’s target.
Core consumer inflation was significantly subdued, rising 0.2% monthly and 2.5% annually, returning to pre-war levels.
Market expectations have shifted in recent days, with traders saying the Federal Open Market Committee is likely to decide on policy at its next meeting on September 15-16, and are now pricing in an October or December rate hike.
In other economic news Thursday, new jobless claims rose to a seasonally adjusted 209,000 for the week ending Aug. 8, an increase of 9,000 from the prior quarter and above expectations of 204,000.
