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U.S. PPI Mimicked CPI in August as Core Prices Kept Rising By –

© Reuters.

By Geoffrey Smith —  Factory gate prices stayed strong in August, corroborating a picture of unbroken and broadening inflationary pressure in the U.S. economy.

The dipped 0.1% on the month from July, thanks to cheaper gasoline prices – down nearly 13% on the month – reducing freight costs. But less volatile elements of the index rose, pushing the ” price index up 0.4%, more than expected. Excluding food, energy and transportation, prices rose 0.2%.

The numbers reflect the same trend as those seen in Tuesday’s report, which also showed headline inflation easing, despite signs of prices broadly rising throughout the economy. 

Corporate profit margins, which have been a key driver of inflation in the last two years, also stayed broadly solid. The Bureau of Labor Statistics said the index for final demand services rose 0.4% on the month, its fourth straight monthly rise, with 60% of that due to a 0.8% increase in margins.

“Like yesterday’s CPI report, today’s PPI report shows that inflationary pressures remain,” tweeted Kathy Jones, chief fixed income strategist with Charles Schwab. 

Nonetheless, there were further signs that the peak in annual inflation may already have passed, with the rising only 7.3% from a year earlier, down from 7.7% in July. The likewise eased to 8.7% from 9.8%.

Greg Daco, chief economist with EY, said that underlying price pressures appeared “less concerning.” In addition to a drop of nearly 2% in the cost of freight transport by truck. there were also price declines for categories as diverse as hotel accommodation and food and alcohol retailing.