The U.S. PPI index data for the month of August is set to release tomorrow. The index shows few signs of domestic producers taking advantage of any additional pricing power because of tariffs, noted Wells Fargo in a research report. Over the past year, the PPI inflation has eased, with the headline index decelerating to 1.7 percent.
Underscoring that weakness, the preferred measure of core PPI inflation, which excludes food, energy and trade services, dropped for the first time last month in almost four years. With the exception of energy, input costs for processed goods and services dropped in July and imply that producer price inflation might remain soft in the near term.
“The PPI got a bump in July due to higher energy costs, but lower gas prices suggest only a 0.1 percent gain in August. That should keep the year-over-year change in producer prices below 2 percent and signal inflation is still not a threat to the Fed’s easier policy stance of late”, added Wells Fargo.