U.S. producer prices increased moderately in July, lifted by a rebound in the cost of energy products, while underlying producer inflation retreated, which could allow the Federal Reserve to cut interest rates again next month.
The Labor Department said on Friday its producer price index for final demand rose 0.2% last month after nudging up 0.1% in June. In the 12 months through July the PPI increased 1.7% after advancing by the same margin in June.
Economists polled by Reuters had forecast the PPI would rise 0.2% in July and increase 1.7% on a year-on-year basis.
Excluding the volatile food, energy and trade services components, producer prices edged down 0.1% last month. That was the first decline since October 2015 and followed an unchanged reading in June. The so-called core PPI increased 1.7% in the 12 months through July after rising 2.1% in June.
The Fed, which has a 2% inflation target, tracks the core personal consumption expenditures (PCE) price index for monetary policy. The core PCE price index increased 1.6% on a year-on-year basis in June and has undershot its target this year.