Reflecting another sharp decline in energy prices, the Labor Department released a report on Wednesday showing a modest decrease in U.S. producer prices in the month of August.
The Labor Department said its producer price index for final demand edged down by 0.1 percent in August after falling by a revised 0.4 percent in July.
Economists had expected producer prices to dip by 0.1 percent compared to the 0.5 percent drop originally reported for the previous month.
The report also showed the annual rate of growth in producer prices slowed to 8.7 percent in August from 9.8 percent in July, roughly in line with estimates.
The slight monthly drop in producer prices came as energy prices tumbled by 6.0 percent in August after plunging by 9.0 percent in July.
Food prices were unchanged in August after jumping by 1.3 percent in July, while prices for goods excluding food and energy crept up by 0.2 percent following a 0.1 percent uptick in the previous month.
Meanwhile, the report showed prices for services climbed by 0.4 percent in August after rising by 0.2 percent in July, with the continued price growth driven by a 0.8 percent advance in prices for trade services.
Prices for transportation and warehousing services edged down by 0.2 percent in August after falling by 0.8 percent in July, while prices for other rose by 0.3 percent in August after coming in unchanged in July.
Excluding prices for food, energy and trade services, core producer prices rose by 0.2 percent in August after inching up by 0.1 percent in July.
The annual rate of growth in core producer prices slipped to 5.6 percent in August from 5.8 percent in the previous month.
“While today’s PPI report suggests inflation is decelerating in parts of the economy, broad-based increases in yesterday’s CPI show that consumer inflation remains stubbornly persistent,” said Matthew Martin, U.S. Economist at Oxford Economics.
He added, “The CPI report keeps the Fed on track to raise rates 75bps next week and at least another 75bps by the end of the year.”
On Tuesday, the Labor Department released a more closely watched report showing an unexpected uptick in U.S. consumer prices in the month of August.
The Labor Department said its consumer price index inched up by 0.1 percent in August after coming in unchanged in July. Economists had expected consumer prices to edge down by 0.1 percent.
The modest increase in consumer prices came as higher prices for shelter, food and medical care offset another steep drop in gasoline prices.
Compared to the same month a year ago, consumer prices were up by 8.3 percent in August, reflecting a slowdown from the 8.5 percent spike in July. However, economists had expected the annual rate of growth to slow to 8.1 percent.
The report also showed core consumer prices, which exclude food and energy prices, climbed by 0.6 percent in August after rising by 0.3 percent in July. Core prices were expected to increase by another 0.3 percent.
The annual rate of growth by core consumer prices accelerated to 6.3 percent in August from 5.9 percent in July, while economists had expected the annual rate of growth to quicken to 6.1 percent.
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