PPI Inflation Remained Soft in August, but Core Edging Up

Wells Fargo Research Team Wells Fargo

The PPI for final demand was flat in August as a rise in core services offset a decline in goods prices. Input prices for both goods and services remain weak and suggest little near-term pressure on PPI.

Domestic Inflation Still Weak with PPI Flat in August

The PPI for goods fell 0.4 percent last month on further declines in food and energy prices. Core goods ticked up.
Services inflation partially rebounded in August, up 0.1 percent after declining 0.3 percent the previous month. Trade services—measured in margins—and transportation & warehousing services posted declines over the month, but other services rose 0.5 percent.

Core PPI Moving Up, but Pipeline Pressures Subdued

Our preferred measure of core PPI, which excludes food, energy and trade services, rose a better-than-expected 0.3 percent, pushing the year-ago rate up to a 20-month high.
Pipeline pressures remain subdued and suggest overall PPI will remain soft. Falling prices for food and energy inputs more than offset a rise in core goods inputs. Input prices for services were flat, lowering the 12-month change to 1.4 percent.

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Wells Fargo Research Team

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