Wholesale prices surprisingly fell slightly in August, providing breathing room for the Federal Reserve to approve an interest rate cut at its meeting this month, according to a Bureau of Labor Statistics report Wednesday.
The producer price index, which measures input costs across a broad array of goods and services, dropped 0.1% for the month, after a downwardly revised 0.7% increase in July. On a 12-month basis, the headline PPI saw a 2.6% gain.
The core PPI, which excludes volatile food and energy prices, also was off 0.1%. Excluding food, energy and trade, the PPI posted a 0.3% gain and was up 2.8% from a year ago.
Services prices, a key metric for the Fed when evaluating the stance of monetary policy, posted a 0.2% drop, helping drive wholesale inflation lower. A 1.7% slide in prices for trade services was the primary impetus, with margins for machinery and vehicle wholesaling tumbling 3.9%.
Goods prices did increase, but just 0.1% as core prices rose 0.3%. While final demand food costs were up 0.1%, energy was off 0.4%.