Key facts
- U.S. producer prices were unchanged in July, following a revised 0.1% drop in June.
- Economists had forecast the Producer Price Index (PPI) to rebound 0.2%.
- Producer goods prices fell 0.7%, while the cost of services increased 0.2%.
- Year-on-year, the PPI increased 4.7% through July, down from 5.5% in June.
- The report adds to the case for the Federal Reserve to maintain current interest rates.
U.S. producer prices remained unchanged in July, a flat reading that missed economists' expectations for a 0.2% rebound and followed a revised 0.1% drop in June. The Labor Department's Bureau of Labor Statistics reported that while producer goods prices fell 0.7%, the cost of services rose 0.2%. Much of the data is collected early in the month, suggesting that a late-July increase in oil prices may not have been fully reflected.
Annually, the PPI increased 4.7% in the 12 months through July, a deceleration from the 5.5% rise seen in June. The Federal Reserve monitors the Personal Consumption Expenditures (PCE) price indexes for its 2% inflation target. Following recent job losses and mild consumer inflation figures, the PPI report supports the view that the U.S. central bank will likely keep interest rates steady at its September 15-16 policy meeting. The Fed currently holds its benchmark overnight interest rate in the 3.50%-3.75% range.