Producer prices flat in August as falling energy prices offset solid core components

Producer prices were flat on the month, as rising services prices offset declines in goods prices, in particular energy goods. The outturn was between forecast (0.1%) and consensus (-0.1%) expectations. Core PPI (ex-food and energy) rose 0.3% m/m (Barclays: 0.2%, consensus: 0.1%). On a y/y basis, headline PPI fell 0.8%, as the base effect related to declines in energy prices in previous months continues to drag the y/y rate, while core PPI inflation rose 0.9% y/y (from 0.6%).

The goods component of PPI declined 0.6% m/m, mainly as a result of a sharp fall in energy prices of 3.3%, while food prices were 0.3% higher on the month. Services inflation was up 0.4% m/m, the third consecutive monthly increase. The strength in this series was driven mostly by the trade component, however, which rose a strong 0.9% m/m.

"Headline personal consumption PPI rose 0.2% m/m (-0.1% y/y, Figure 1) and the core measure posted a 0.4% monthly gain (1.7% y/y). The August report suggests a split in producer price pressures, with goods prices and in particular energy goods being a drag. Services prices, which are probably a better measure of domestically driven price pressures, were solid, however", says Barclays.