U.S. producer prices rise below expectations in July

U.S. producer prices came in slightly softer than expectations in July. The final demand PPI rose 0.2 percent sequentially and 1.7 percent year-on-year. Excluding food, energy and trade, PPI dropped 0.1 percent sequentially and rose 1.7 percent year-on-year. Goods PPI inflation continued to be weak outside of the food and energy components, while services PPI dropped.

Personal consumption PPI, which widely tracks the trend in the annual CPI measure, rose 0.1 percent sequential and 1.8 percent year-on-year. The less volatile measure of personal consumption PPI that excludes food, energy, and trade margins dropped by 0.1 percent sequentially and rose 1.8 percent year-on-year. These readings suggest some downside risks to the forecast for July CPI, said Barclays in a research report.

“We expect headline CPI inflation to have increased by 0.3 percent m/m and 1.7 percent y/y and core CPI (excluding food and energy) to have risen 0.2 percent m/m and 2.1 percent y/y”, stated Barclays.