U.S. producer prices fell for second straight month in August as the cost of gasoline declined further, resulting in the smallest annual increase in a year, which could allay fears of inflation becoming entrenched.
The report from the Labor Department on Wednesday also showed underlying producer inflation rising moderately last month, suggesting snarled supply chains were loosening up. It followed on the heels of news on Tuesday of a surprise increase in monthly consumer prices in August, which cemented expectations for a third 75 basis points interest rate hike from the Federal Reserve next Wednesday.
The cost of services increased 0.4% after rising 0.2% in July. Sixty percent of last month's advance in services was attributed to a 0.8% rise in margins received by wholesalers and retailers. Prices for portfolio management rose. But there were decreases in the costs of truck transportation of freight and guestroom rental, as well as food and alcohol retailing.
Excluding the volatile food, energy and trade services components, producer prices gained 0.2% in August. The so-called core PPI edged up 0.1% in July. In the 12 months through August, the core PPI advanced 5.6% after increasing 5.8% in July.
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