In the United States, the main corporate cost index fell in July for the first time in almost two years. Mainly reflecting lower energy costs, this could be seen favorably as a reduction in inflationary pressures.
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Bar graph: U.S. PPI, Line graph: U.S. core PPI (both month-on-month changes, seasonally adjusted)
Source: U.S. Bureau of Labor Statistics
About 80% of the decline in goods prices is due to a 16.7% drop in gasoline. Prices of diesel oil, scrap iron and steel, and grains were also lowered.
There were signs that inflationary pressures in the production process were beginning to ease. It could slow the pace of consumer price index (CPI) gains in the coming months. Commodity prices, including oil, have fallen sharply in recent months, suggesting that conditions in supply chains are improving.
US CPI decelerates more than expected, falling energy prices – rate hike pressure eased (3)
However, risks remain. Although supply chains have begun to normalize, the war in Ukraine, labor disputes at US West Coast ports, and China’s zero-coronavirus policy could slow down the transportation of US products and materials.
Service prices rose only 0.1%. Increases in fuel margins, transportation, and warehouses contributed. Others, such as portfolio management, food and alcohol retail, and long-haul trucking, declined.
The PPI, which excludes food, energy and trade services, rose 0.2% from the previous month. Compared to the same month of the previous year, it increased by 5.8%.
Original title:US Producer Prices Fall for First Time Since Early in Pandemic(excerpt)
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