Big­gest drop in US PPI in al­most a year

The Star Early Edition - - LETTERS -

US PRO­DUCER prices un­ex­pect­edly fell in July, record­ing their big­gest drop in nearly a year and point­ing to a fur­ther mod­er­a­tion in in­fla­tion that could de­lay a Fed­eral Re­serve in­ter­est rate in­crease. Other data yes­ter­day showed an in­crease in the num­ber of Amer­i­cans fil­ing for un­em­ploy­ment ben­e­fits last week. The trend in weekly job­less claims, how­ever, re­mained con­sis­tent with a tight­en­ing labour mar­ket. The labour depart­ment said yes­ter­day that its pro­ducer price in­dex for fi­nal de­mand slipped 0.1 per­cent last month, weighed down by de­creas­ing costs for ser­vices and en­ergy prod­ucts. That was the largest de­cline since Au­gust 2016 and re­versed June’s 0.1 per­cent gain. In the 12 months to July the pro­ducer price in­dex (PPI) in­creased 1.9 per­cent af­ter ris­ing 2 per­cent in the year to June. Econ­o­mists had fore­cast the PPI tick­ing up 0.1 per­cent last month and climb­ing 2.2 per­cent from a year ago. Though the link be­tween the PPI and the con­sumer price in­dex has weak­ened, last month’s drop in pro­ducer prices could worry Fed of­fi­cials who ar­gue that the mod­er­a­tion in in­fla­tion was tem­po­rary. Fed chair­per­son Janet Yellen told law­mak­ers last month that “some special fac­tors” were partly re­spon­si­ble for the low in­fla­tion read­ings. – Reuters

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