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U.S. producer prices hold steady in July, lifting rate pause bets
The flat Producer Price Index came after a revised 0.1% drop in June, while services costs edged up 0.2% and goods prices fell 0.7%.
U.S. producer prices were unchanged in July, according to data from the Labor Department, with goods prices declining while services costs rose marginally. The report, released Thursday, added to expectations in financial markets that the Federal Reserve could keep interest rates unchanged at its next meeting.
The Producer Price Index for final demand was flat after a revised 0.1% drop in June. In year-over-year terms, the PPI increased 4.7% through July, down from a 5.5% gain in June, and most of the underlying data were collected early in the month, before sharp late-July oil moves could feed through.
Goods prices fell 0.7% in July following a 1.4% slide in June, driven by lower energy prices, which decreased 3.1% and included wholesale gasoline down 5.7%. Food prices also declined 0.9%, while excluding food and energy, goods prices rose 0.1%.
Services costs increased 0.2% after a 0.5% gain in June, helped by a 6.5% jump in portfolio management fees tied to a stock market rally, partially offset by a 3.4% decline in airline fares. Reuters reported that Samuel Tombs of Pantheon Macroeconomics said the lack of spillovers from higher energy into services, along with a fragile labor market, should keep Fed policy unchanged for the rest of the year.
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