The Producer Price Index dropped 0.1% in August, against expectations of a 0.2% rise. According to analysts at Wells Fargo, the miss stemmed largely from the volatile trade-services sector, which measures margins. They point out that core inflation continues to gradually climb.
Key Quotes:
“PPI inflation unexpectedly slipped 0.1% in August. Goods prices were flat, but the miss came in large part from services, specifically a 0.9% drop in the volatile trade-services sector, which measures margins, not selling prices. Declining margins at machinery and equipment firms accounted for 80% of the decline in services this month and suggest producers may be struggling to pass on rising input costs related to recent tariffs.”
“Our preferred measure of core inflation, which excludes food, energy and trade services, also came in a bit softer than expected -up 0.1%”” as transportation & warehousing prices fell. The trend remains upward, however, with the “core-core” measure climbing to 2.9% over the past 12 months versus 1.9% the 12 months prior.”
Share
