(It has fallen further since then, closing at $42.23 a gallon on August 13 – its lowest level since March 2009.) To be fair, final demand energy goods costs were 17.7 percent lower in July than 12 months ago. Core prices, which exclude the volatile categories of energy and food, are up a modest 0.6 percent over the past 12 months. Food prices rose 0.6 percent in June.
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Excluding food and energy, prices rose 0.3% versus 0.1% expected.
Economists surveyed by The Wall Street Journal had forecast overall and core producer prices would climb 0.1%.
The Department of Labor announced on Friday the producer price index for final demand had increased by 0.2% in July after its June increase of 0.4%. Economists polled by MarketWatch had predicted a 0.1% rise in the PPI.
U.S. producer prices rose for a third straight month in July, but inflation pressures remain benign against the backdrop of lower oil prices and a strong dollar.
Many private economists have pegged the Fed’s next meeting in September as the time when the central bank will start raising rates.
Inflation has persistently run below the 2% target of the Fed, a government report showed on Thursday. This followed a 0.4 percent increase in June. As a result, wholesale goods prices are projected to have risen more moderately in July. Wholesale chicken egg prices fell 24.2 percent in July after soaring a record 84.5 percent in June.
“While the hawks may choose to focus on the unexpected 0.2% monthly increase, the doves have an equally fueled argument to urge patience as the annual rate of inflation reaffirms a deflationary scenario”, she said.
Services categories include broad areas like financial auditing, architectural services and legal advice.
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But when the price of services is taken into account, inflation seems less tame than the recent weakness in commodity prices would indicate.
