A gauge of U.S. business prices was flat last month, a sign of continued mild inflationary pressures as Federal Reserve officials debate whether to raise short-term interest rates.
The producer-price index for final demand, measuring changes in the prices that U.S. companies receive for their goods and services, was unchanged on a seasonally adjusted basis in August compared with the prior month, the Labor Department said Thursday. Economists surveyed by The Wall Street Journal had expected a 0.1% increase.
Falling prices for food and energy held down the headline price index. Excluding those often-volatile categories, prices rose 0.1% last month, a modest gain that forecasters had expected.
Prices were up a brisker 0.3% from July when excluding food, energy and a measure of wholesaler and retailer margins known as trade services.
The PPI was flat in August from a year earlier, up from July’s annual decline of 0.2%. Prices were up 1.2% on the year when excluding food, energy and trade services—the largest annual gain since December 2014 and a sign that inflation could be set to firm in the coming months.
Thursday’s report “suggests some continued firming in core pipeline pressures, but the headwinds from energy and food prices remain in place,” Barclays economist Blerina Uruçi said in a note to clients. “As the drag from these volatile components wanes, we expect PPI gradually to pick up and to feed through to a firming in consumer prices.”
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