U.S. producer prices unexpectedly decline in July

Economic Indicators

Producer price inflation in the U.S. unexpectedly declined in July, while core prices also registered a surprise drop, official data showed on Friday.

In a report, the Commerce Department said that producer prices fell by a seasonally adjusted 0.4% last month, worse than the forecast for a 0.1% advance and after a 0.5% gain in June.

Year-over-year, the producer price index (PPI) unexpectedly decreased 0.2%, compared to expectations for a gain of 0.2% and following a rise of 0.3% in the preceding month.

The core producer price index, that excludes food and energy, dropped by 0.3% in July, worse than forecasts for a gain of 0.2% and following a rise of 0.4% a month earlier.

Core producer prices increased at an annualized rate of 0.7% last month, below expectations for 1.2% advance and after rising 1.3% in the preceding month.

Core prices are viewed by the Federal Reserve as a better gauge of longer-term inflationary pressure because they exclude the volatile food and energy categories. Furthermore, when producers pay more for goods, they are more likely to pass price increases on to the consumer, so PPI could be considered a leading indicator of inflation.

Source Investing.com