PPI in focus: wholesale prices stall in July

On Thursday, the Bureau of Labor Statistics announced that the producer price index (PPI) showed no change in July. The stagnation of wholesale prices, especially in the energy and food sectors, sparked new discussions about the inflation trajectory in the United States.

PPI indicates wholesale price stagnation in July

The report showed that the overall PPI remained unchanged for the month, below the estimated increase of 0.2%. The previous monthly change had been a decline of 0.1%. The food index fell 0.9% and the energy index dropped 0.7%.

Difference between the overall index and the core PPI

Excluding food and energy, the core PPI rose 0.2%, also below the projected 0.3%. The core that excludes commercial services advanced 0.4%. Over the twelve-month period, the overall index rose 4.7% and the core 4.2%.

Impacts on U.S. monetary policy expectations

The data suggest that inflationary pressures in the early stages of production are not raising consumers' cost of living. Chris Rupkey, chief economist at Fwdbonds, highlighted that the absence of an increase in final PPI prices is good news for the cost crisis in the United States. The market responded with positive equity futures and falling Treasury yields, while traders lowered the odds of a rate hike in September.

Sectors showing variations: energy, food and technology

Energy prices fell 3.1%, driven by a 5.7% drop in the gasoline index. Food prices also receded, marking a second consecutive decline. On the other hand, semiconductor and memory components recorded a 27.1% increase year-over-year, although there was a slight slowdown compared to June's 27.7%, reflecting the massive investment in artificial intelligence.

Outlook for consumer inflation

The Consumer Price Index (CPI) showed a 0.1% rise in July, reinforced by the decline in energy prices. However, the annual rate of 3.4% still exceeds the Federal Reserve's 2% target. The evolution of the PPI suggests that producer inflation may continue to cool, but volatility in energy prices remains an uncertain factor.

With information from CNBC, CNN.