Affected by the rebound in service costs, the producer price index in the USA rose slightly higher than expected in August. The Federal Reserve's preferred inflation indicator "Personal Consumption Expenditures Price Index" showed moderate performance, and the market still expects the Federal Reserve to cut interest rates by 25 basis points next week.
USA's August PPI increased slightly by 1.7% year-on-year, with the Federal Reserve's preferred inflation indicator, the 'Personal Consumption Expenditures Price Index' showing moderate performance. Inflation pressure is easing, and the market still expects the Federal Reserve to cut interest rates by 25 basis points next week.
On Thursday, September 12, the U.S. Bureau of Labor Statistics (BLS) released data showing that the August PPI in the USA increased by 1.7% year-on-year, slightly lower than expected, the lowest since February; month-on-month it rose by 0.2%, higher than the expected 0.1%; at the same time, the July PPI was revised down from 2.2% to 2.1%, further indicating that inflation pressure is easing.
Excluding food, energy, and trade services, the core PPI in August increased by 2.4% year-on-year, in line with expectations, higher than the previous value of 2.3%; month-on-month it rose by 0.3%, higher than the expected 0.2%.
The increase in PPI was mainly driven by the service industry.
In August, service prices rose by 0.4%, compared to a 0.3% drop in July. BLS points out that the 4.8% increase in housing rental costs was the 'main factor' behind this month's rise in service prices.
In addition, the price indices for machinery and vehicle wholesale, auto fuel and lubricant retail, residential real estate loans (partially), wholesale of professional and commercial equipment, and retail of furniture also rose. Meanwhile, airline passenger service prices fell by 0.8%, and prices for food and beverage retail, membership fees, entrance fees, and entertainment facility usage fees (partially) also declined.
In August, commodity prices remained unchanged, after rising by 0.6% in July, a significant 0.9% drop in energy costs limited the overall growth of commodity prices.
Among them, the price of non-electronic cigarettes rose by 2.3%; the prices of eggs, rbob gasoline, diesel, and pharmaceuticals also rose. On the other hand, the price of aviation fuel decreased by 10.5%; the prices of meat, electrical utilities, hay, grass seeds, oil seeds, and non-ferrous scrap also decreased.
The market is still betting on a 25 basis point interest rate cut by the Federal Reserve this month.
Wholesale inflation data shows that potential inflation in the United States accelerated in August due to rising housing costs. However, with cost pressures easing in the past few months and concerns about a weakening labor market, the market still expects the Federal Reserve to begin cutting rates next week.
The preferred inflation indicator for the Federal Reserve, the "Personal Consumption Expenditures Price Index", performed moderately. Among them, the indices measuring investment portfolio management fees, doctor care, and hospital inpatient care costs remained unchanged, while airfare prices decreased by 0.8%.
Editor/Lambor