After accelerating on and off for the last few months, Core Producer Prices and Final Demand both came in lower than expected in July as a drop in margins for fuels offset a rise in guestroom rentals and drug prices.
PPI Final Demand printed +3.3% YoY (against 3.4% prior and expectations)
In July, a 0.1-percent rise in the index for final demand goods offset a 0.1-percent decline in prices for final demand services.
In July, a major factor in the increase in prices for final demand goods was the index for pharmaceutical preparations, which rose 0.7 percent. Prices for eggs for fresh use, fresh fruits and melons, motor vehicles, and liquefied petroleum gas also moved higher. Conversely, the electric power index fell 1.6 percent. Prices for meats; hay, hayseeds, and oilseeds; and nonferrous scrap also decreased.
Leading the July decline in prices for final demand services, margins for fuels and lubricants retailing dropped 12.7 percent. The indexes for machinery and equipment parts and supplies wholesaling, food retailing, hospital outpatient care, and airline passenger services also moved lower. Conversely, prices for guestroom rental climbed 3.9 percent. The indexes for apparel, jewelry, footwear, and accessories retailing; inpatient care; and truck transportation of freight also increased.
Finally, core PPI also missed expectations and slipped back from seven year highs…
Is this ‘Goldilocks’ enough to leave The Fed on its current ‘gradual’ path?
