Producer Prices Held Down By Drop In Food And Energy Prices

Sharp contraction in food and energy prices held down producer prices in August to an as-expected 0.1 percent increase excluding which producer prices rose 0.3 percent to exceed expectations by 1 tenth. When also excluding trade services, which track retail and wholesale prices, producer prices rose a sharper-than-expected 0.4 percent.

Food prices, reflecting sharp declines for both vegetables and grains, fell 0.6 percent with energy prices down 2.5 percent in the month that included a 6.6 percent drop for gasoline. Trade service prices rose 0.2 percent in the month and were held back by a 4.2 percent decline for machinery wholesaling that offset a sharp 16.8 percent gain for fuel & lubricant retailing. Service prices overall rose 0.3 percent and were boosted by a 6.4 percent monthly jump in guestroom rental while goods prices fell 0.5 percent overall.

Year-on-year rates did move up in this report, to 1.8 percent overall and 2.3 percent when excluding both food and energy, yet this report is mixed showing isolated jumps but underscored by a 0.1 percent year-on-year decline for total goods that rises to only 1.0 percent for goods ex-food ex-energy.