WASHINGTON — Final demand PPI fell 0.1% in July, both including and excluding food and energy prices, compared with expectations for 0.2% gains for both, data released Thursday by the Bureau of Labor Statistics showed.
The core rate the BLS prefers, excluding changes in volatile profit margins as well as food and energy, was flat in July. Trade services prices themselves fell 0.5% in the month, while overall services were down 0.2%.
The year/year rates for these measures indicated deceleration. Overall PPI was up 1.9% year/year in July after a 2.0% year/year rise in June. At the same time, the year/year rate for PPI excluding food and energy slowed to 1.8% from 1.9% in June and the year/year rate for PPI excluding food, energy and trade services fell to 1.9% from 2.0% in the previous month.
Overall, the data points to weak wholesale inflation that should spill over into consumer prices on a monthly basis, and a pullback in y/y inflation that weigh into the FOMC's inflation discussion.
The softer-than-expected reading for July was not due to just a few factors. Rather, the declines were "broad-based" BLS senior analyst Scott Sager told Market News International during the data "lockup" prior to publication.
Sager told MNI that declines can be found across both goods and services and even lead back through the intermediate categories.
Energy prices fell 0.3% in July, led by declines for residential fuels, gasoline, and natural gas prices. Food prices were flat in the month, though prices of beef and vegetables declined.
Within the core measures, there were declines for passenger cars and light trucks, but services gains for hospital care and legal services.
