It’s a stretch where in sixth consecutive months the prices have been lower on a year on year basis.
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MODERATE PRICES: In June, wholesale prices rose a modest 0.4 percent after being up 0.5 percent in May.
There were notable price falls in clothing and footwear (6.6%), fresh fruit (1.8%), and furniture and household equipment (0.8%).
The Labor Department said on Friday its producer price index (PPI) rose 0.2 per cent in July, slightly above the 0.1 per cent increase projected by analysts. In July, producer prices for services rose 0.4% while goods declined 0.1%.
Much of the current attention from inflation watchers has been focused on the sharp drop in energy and other commodities, as a glut of supply has collided with a slowdown in demand.
A gauge of US business prices rose for the third straight month in July, a sign inflation has stabilised following months of historically weak readings.
Inflation has been persistently running below the Fed’s 2% target.
The Federal Reserve has said that it needs to feel “reasonably confident” that inflation will move back to its 2 percent goal before beginning to raise interest rates from a record low near zero, where a key Fed rate has been since late 2008.
That added to the surprise devaluation in China of the yuan has some economists thinking that the Fed might hesitate to increase interest rates in September. Egg prices, which had been surging because of the avian flu outbreak, reversed and fell 24.2 percent. For instance, food prices have fallen 3.7 percent year-over-year.
Economists have estimated that the 10% drop in the yuan versus the dollar could shave one-tenth of the percentage point from inflation in the U.S. over the next 12 months.
In a preview of the data to clients, BNP Paribas economists wrote: “Prices of eggs and pharmaceutical preparations surged in June and likely retreated a bit in July”.
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