US producer prices hold steady in July as goods costs ease
US producer prices were unchanged in July, with goods falling and services rising, reinforcing expectations the Fed will keep rates steady next month.
Wholesale prices in the United States were unchanged in July, as a decline in the cost of goods offset an increase in services, according to data released on Thursday by the Labor Department.
The flat reading in the Producer Price Index (PPI) for final demand followed a revised 0.1% drop in June. Economists had expected a 0.2% rebound for the month.
Services costs rose 0.2% in July, while goods prices fell 0.7%. The data is largely collected early in the month, meaning the sharp rise in oil prices towards the end of July was likely not captured in the report.
On an annual basis, the PPI increased 4.7% in the 12 months through July, a slowdown from the 5.5% advance recorded in June.
The report follows unexpected job losses in July and mild consumer inflation readings, adding to expectations that the Federal Reserve will keep interest rates unchanged at its September 15-16 policy meeting. The central bank last month left its benchmark overnight rate in the 3.50%-3.75% range.
The Fed tracks the Personal Consumption Expenditures (PCE) price indexes for its 2% inflation target. Prior to the PPI release, economists estimated that the core PCE index — which excludes volatile food and energy components — rose 0.2% in July after a 0.1% gain in June, with a 3.3% year-on-year increase, matching June's pace.