Wholesale prices rose far more than expected in July, which provided a potential sign that inflation is still a threat to the US economy, as a report by the Bureau of Labor Statistics on Thursday was.
The producer price index, which measures the final demand for demands and service prices, rose by 0.9%a month, compared to the estimate of Dow Jones for a profit of 0.2%. It was the largest monthly increase since June 2022.
With the exception of food and energy prices, the Kernppi rose 0.9% compared to the forecast for 0.3%. Without food, energy and trade services, the index increased by 0.6%, the greatest profit since March 2022.
Every year the headline-(rose by 3.3%, the largest 12-month step since February and well above the 2% inflation target of the Federal Reserve.
The inflation of the services provided a large part of the advance and rose by 1.1% in July, also since March 2022.
In addition, 30% of the increase in services came up by 3.8% by increasing the wholesale of machines and devices. In addition, the fees for portfolio management fees increased by 5.4% and prices for the airlines of the airlines rose by 1%.
After the publication, the stock exchange futures fell, while the returns of the shorter duration were higher.
Although PPI is less followed than the BLS consumer price index, it provides important information about pipeline prices. Together, feed the measures into the price index of the Ministry of Commerce, the primary inflation forecast of the FED, which will be updated later this month.
“The fact that PPI was stronger than expected and CPI is relatively soft suggests that companies eat a large part of the tariff costs instead of passing them on to the consumer,” said Clark Geranen, chief strategist for Calbay Investments. “Companies could soon reverse the course and pass them on to consumers.”
Since the CPI addressed expectations at the beginning of this week, the markets had a virtual certainty that the Fed would reduce its most important interest rate if it meets in September. After the publication, the market-controlled probability of a September average, according to the Fedwatch tool of the CME Group, only took back slightly. The dealers have significantly reduced the probability of three cuts this year.
“The great increase in the producer price index this morning shows that inflation is running through the economy, even if it has not yet been felt by consumers,” wrote Chris Zaccarelli, Chief Investment Officer at Nortlight Asset Management. “In view of the kind that the CPI numbers on Tuesday are an extremely undesirable surprise for the upward trend and will probably handle some of the optimism of a guaranteed installment shortening next month.”
However, the White House said that the details of the report showed that the business did not exceeded the costs of tariffs to consumers.
The reports arise in the middle of questions about the accuracy of BLS data.
Trump released the former BLS commissioner at the beginning of this month and said that he intended, EJ Antoni, economist of the Heritage Foundation as the next head of the office. Antoni was a critic of the BLS and even has the idea of exposing the monthly report of the non -farmers' salary bills until data accuracy can be better guaranteed.
The BLS were forced by budget cuts and layoffs that they have forced to change the way they collect data. The PPI report from July was the first since the office removed around 350 categories from the exhaustive number of input costs.
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