Wholesale inflation gauge rises 0.1%

A key indicator for wholesale inflation The increase in July was lower than expected. Fed Start lowering interest rates.

this Producer Price IndexThe U.S. Department of Labor’s Bureau of Labor Statistics reported on Tuesday that the PPI, which measures producer sales prices of goods and services, rose 0.1% from the previous month. Excluding the more volatile food and energy components, the core PPI was flat.

Economists surveyed by Dow Jones expected both the total and core figures to rise 0.2%.

Another core gauge excluding trade services showed the index rose 0.3%.

Compared with the same period last year, the overall PPI rose 2.2%, a sharp drop from 2.7% in June.

Stock Market Futures The pound rose against the dollar on the news, while government bond yields fell.

Wholesale inflation was relatively benign, although prices for final demand goods rose 0.6%, the biggest gain since February, mainly due to a 1.9% increase in energy prices, including a 2.8% increase in gasoline prices.

In contrast, the services sector slipped 0.2%, the biggest drop since March 2023, the Bureau of Labor Statistics said. Trade services prices fell 1.3%, while machinery and vehicle wholesale margins fell 4.1%. A 2.3% increase in portfolio management offset some of the decline in service prices.

The PPI is considered a leading indicator of inflation as it measures expected inflation from the perspective of manufacturers and suppliers of goods and services. Its counterpart is the Consumer Price Index, which will be released on Wednesday and measures the actual prices paid by consumers in the market. Economists also expect a monthly increase of 0.2% for both the headline and core CPI.

Both indicators are closely watched for signs of inflation. Although the Fed pays more attention to the Commerce Department’s personal consumption expenditures price index, both CPI and PPI are included in that calculation.

The latest inflation data accompanied the market Take full account of the impact of interest rate cuts At the Federal Open Market Committee’s September meeting, the Fed will cut interest rates. The main question now is whether the central bank will cut rates by a quarter or half a percentage point. The futures market currently rates this as a toss-up.

Federal Reserve officials have vowed to continue fighting inflation until their 2% target is reached, and the latest data have mostly been consistent with that expectation.

one The New York Fed released its survey results on Monday. The survey showed that consumers’ expectations for inflation in three years’ time fell to 2.3%, the lowest level in the 11 years of the survey.

In addition, the survey also showed that consumers, especially low-income consumers, are beginning to be more affected by inflation. For example, the probability of not being able to pay the minimum debt in the next three months jumped to 13.3%, the highest level since April 2020, with most of the 1 percentage point increase in monthly income coming from households with an annual income of less than $50,000.

Expectations for obtaining credit also declined, with expectations for household spending over the next year falling to their lowest level since April 2021.