In a fresh sign that inflation pressures may be cooling, the producer price index showed no change in July, defying expectations for a 0.2% gain.
The Bureau of Labor Statistics reported Thursday that the PPI, a key measure of underlying wholesale inflation, was unchanged month over month after falling 0.1% in June.
The June figure was revised from a previously reported decline of 0.3%, offering a slightly more favorable backward look at pricing trends.
Excluding food and energy, core PPI rose 0.2% for the month, coming in below the 0.3% forecast that economists had projected heading into the report.
The core PPI figure excluding trade services climbed 0.4%, while the headline annual PPI increased 4.7% and core rose 4.2% on an unadjusted basis.
The flat reading follows a broader pattern of easing price pressures after a ramp-up in inflation fueled earlier this year by the Iran war and President Donald Trump’s tariffs.
Stock market futures moved higher following the data release while Treasury yields declined, and traders further reduced the odds of a September rate hike from the Federal Reserve.
Chris Rupkey, chief economist at Fwdbonds, offered an encouraging read on the figures, stating that “pipeline pressures at the lower stages of production are not adding to the inflation risks the consumer faces.”
Rupkey added that “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.”
Services prices rose 0.2% for the month, driven by a 6.5% surge in portfolio management, a category prone to outsized gains in the first month of each quarter due to reporting requirements.
Goods prices fell 0.7%, supported by a 3.1% decrease in energy costs, including a notable 5.7% slide in the gasoline index, while food prices declined 0.9%.
The PPI report arrived a day after the BLS said the consumer price index rose just 0.1% in July, aided by falling energy prices during the month.
The headline annual CPI rate of 3.4% remained well above the Federal Reserve’s 2% target, keeping pressure on policymakers to act despite the recent moderation.
Core consumer inflation posted a 0.2% monthly gain and a 2.5% annual rate, bringing the level back to where it stood prior to the start of the war.
Market expectations have shifted notably in recent days, with traders now pricing in a rate hike in October or December rather than at the Fed’s September 15-16 meeting.
Initial jobless claims also came in above forecasts Thursday, rising to a seasonally adjusted 209,000 for the week ended August 8, up 9,000 from the prior period and above the 204,000 estimate.
