The US producer prices unexpectedly declined in August, reporting their first drop in 18 months. The lower food prices and a number of trade services overshadowed the appreciation of energy services. The Labor Department reported on Wednesday that the index of producer prices for final demand dropped by 0.1% last month after remaining unchanged in July. The fall in August is the first since February 2017.
For the 12 months until the end of August, the index rose by 2.8%, slowing down from 3.3% in July.
The economists forecast the index in August to increase by 0.2% mom and 3.2% yoy.
The key indicator of the core producer prices, excluding food, energy and trade services, rose by 0.1% last month on a monthly basis, compared to 0.3% in July. On an annual basis in August, the core index rose to 2.9% from 2.8% in the seventh month of the year.
Despite a slowdown in producer prices last month, the inflation is generally accelerating against the strong labor market and a stable economy. The import duties on wood, laundries, solar panels, steel and aluminum, as well as a number of other Chinese production, are expected to further exacerbate price pressure.
The preferred Federal Reserve inflation rate, the consumer price index, excluding food and energy, rose by 2.0% in July, reaching the central bank’s target for the third time this year.