US PPI Rise Slightly After Gas Price Drop

U.S. producer prices rose marginally in July as a decline in the cost of energy goods offset higher food prices, pointing to a moderation of inflation pressures at the factory gate.

The Labor Department said on Friday its producer price index for final demand edged up 0.1 percent after a 0.4 percent rise in June. The increase was in line with economists’ expectations.

Producer inflation data has been volatile since the government revamped the PPI series at the start of the year to include services and construction.

Swings in prices received for trade services, a gauge of margins for retailers and wholesalers, have made it hard to see a clear trend in producer prices.

Overall, inflation has been rising in recent months, a fact acknowledged by the Federal Reserve at its July policy meeting. The U.S. central bank, which had repeatedly warned that price pressures were too low, said the likelihood of inflation running persistently below its 2 percent target had diminished somewhat.

In the 12 months through July, producer prices increased 1.7 percent after rising by 1.9 percent in the year to June.

Last month, prices at the factory gate were held back by declining energy prices. Gasoline prices fell 2.1 percent last month after rising 6.4 percent in June. Food prices increased 0.4 percent in July.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza