U.S. wholesale prices unchanged in July, missing modest growth forecast

Wholesale prices for goods and services showed no change in July, according to the U.S. Bureau of Labor Statistics, marking the second month the producer price index (PPI) did not increase. The overall PPI was flat, below the Dow Jones consensus estimate of a 0.2% rise and following a 0.1% decline in June, which was later revised from a previously reported 0.3% drop.

Core PPI, which excludes food and energy, rose 0.2% against a forecasted 0.3% gain, while core PPI excluding trade services increased 0.4%. On a year-over-year basis, the headline PPI was up 4.7% and the core index rose 4.2%.

Services prices edged up 0.2%, driven by a 6.5% jump in portfolio-management fees, a category that can experience large quarterly swings. Goods prices fell 0.7%, helped by a 3.1% decline in energy costs, including a 5.7% drop in gasoline, and a 0.9% decrease in food prices, although core goods prices rose 0.1%.

"Net, net, pipeline pressures at the lower stages of production are not adding to the inflation risks the consumer faces," said Chris Rupkey, chief economist at Fwdbonds. "It counts as good news that for a second consecutive month, PPI final demand prices have not gone up adding to the cost of living crisis faced by Americans."

The data arrived as stock-market futures rose and Treasury yields fell, prompting traders to lower the probability of a September rate hike by the Federal Reserve. Market participants are now pricing in a possible rate increase in October or December.

The report follows a modest 0.1% rise in the consumer price index for July, also driven by lower energy prices, though the annual CPI rate remained at 3.4%, above the Fed’s 2% target. Core consumer inflation was 0.2% month-over-month and 2.5% year-over-year, matching pre-war levels.

In related labor market news, initial jobless claims increased to a seasonally adjusted 209,000 for the week ending Aug. 8, up 9,000 from the previous week and above the 204,000 estimate.