US producer price inflation slows on monthly, annual basis in July

US producer price inflation weakened on a monthly and annual basis in July amid a decline in service prices, led by those of motor vehicle and parts dealers.

The Producer Price Index (PPI), a measurement of average price changes seen by producers and manufacturers, was 2.2% for the 12 months ended in July, a stark pullback from the 2.7% increase registered in June, according to Bureau of Labor Statistics data released today, Aug. 13.

Meanwhile, its core counterpart, which excludes food, energy and trade services products, accelerated slightly to 3.3% last month, from 3.2% in June.

On a monthly basis, the PPI climbed by 0.1% in July, against forecasts for a 0.2% hike, after adding 0.2% in the previous month and remaining unchanged in May.

On the other hand, core producer prices edged 0.3% higher after advancing by 0.1% in June. This compared to a contraction of 0.1% in January.

The monthly increase in PPI was due to a 0.6% uptick in commodity prices (the highest pace of increase since last February), compared to a 0.2% decrease in service prices.

The 1.9% leap in energy prices contributed to approximately 60% of gains achieved in the Commodity Price Index. Further, the 2.8% jump in gasoline prices accounted for 25% of the index’s month-on-month (MoM) growth.