US: Pickup in core inflation should remain modest – Wells Fargo


“Final prices at US producers were unchanged in July, but our preferred measure of core PPI rose a bit more than expected”, wrote analysts at Wells Fargo. According to them, price changes for intermediate goods suggest the pickup in core inflation should remain modest.

Key Quotes: 

“Producer price inflation stalled in July, but the details show the underlying trend remains upward. The headline was held down by a 0.5 percent drop in energy prices.”

“Trade services, which are measured by changes to margins, was the biggest drag on the headline in July, falling 0.8 percent.

“Rising input costs have become more ubiquitous in business surveys amid tighter capacity and tariffs. Intermediate prices for processed goods were flat last month, however, and input costs for services are growing more slowly than earlier this year. Therefore, the upward trend in core inflation should remain gradual.”

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