The US producer prices fell for the first time since early in the Pandemic, as well as for the first time in a long time.
In July, producer prices for the US fell for the first time in more than two years, a key measure of the drop in energy costs and showing a welcome moderation in inflationary pressures.
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The final demand producer price index decreased by 0.5% from a month ago, and rose 9.8% from a year ago, Labor Department data showed Thursday. Services prices went up despite a decline in the costs of goods.
The core PPI rose by 0.2% from June and 7.6% from a year ago, excluding the volatile food and energy components. Both the core and overall figures were softer than expected.
The figures suggest that pipeline inflationary pressures are beginning to relax, which could eventually temper consumer price growth in the coming months. Commodity prices, including oil, have dropped sharply in recent months, and there are indications that supply-chain conditions are improving.
Treasury yields remained lower while the dollar weakened as S&P 500 futures extended gains.
Consumer price data released Wednesday showed a welcome moderate in July, largely due to a pullback in prices at the pump. Inflation remains high and will likely keep the Federal ReserveFederal Reserve on an aggressive path to curb it.
The report showed that 80% of the decline in goods prices was due to a 16.7% plunge in gasoline prices. Diesel, iron and steel scrap and grains decreased.
In July, services prices increased by 0.1%, due to an increase in fuel margins and transportation and warehousing. It was the smallest advance in three months, as prices for portfolio management, food and alcohol retailing and long-distance trucking declined.
Thursday s report adds to separate data from S&P Global and regional Fed banks showing a pullback in prices paid for inputs like materials in July.
There are risks that remain. While supply chains have started normalizing, the war in Ukraine, labor negotiations at West Coast ports and China's zero-Covid policy are potential logistics speed bumps for US producers.
Producers' prices excluding food, energy, and trade services - which strips out the most volatile components of the index - increased by 0.2% from June and 5.8% from a year earlier.
A plunge in diesel costs was the reason behind the drop. More than half of the drop was attributable to the fact that half of the drop was due to the plunge in fuel costs. Excluding foods and energy, these costs dropped by 0.2%.
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