EmailAfter declining 0.4% in June, producer prices increased 0.2% in July. The Briefing.com Consensus expected the PPI to show no growth.
As expected, the volatility in energy and food prices slowed significantly in July and had little effect on overall producer prices. Food prices increased 0.6% on slightly higher beef and veal costs while the energy index fell 0.6% as gasoline prices fell 2.8%.
Excluding food and energy, core prices increased 0.4% in July, up from 0.3% growth in June, and the largest increase since January. The Briefing.com consensus expected core prices to increase 0.2%.
The relative spike in core prices, however, is not a sign of increasing inflationary pressures. Tobacco product prices increased 2.8% in July and accounted for 0.1 percentage points of core PPI growth. The increase is most likely from a one-time tax increase and not from a stable upward moving trend. Excluding the tobacco increase, PPI growth in July was within its normal range.
