U.S. wholesale prices were unchanged in July from June and rose 4.7% from a year earlier, offering businesses and the Federal Reserve a measure of relief after an energy-driven inflation surge. The Bureau of Labor Statistics released the data on Thursday, August 13. The softer reading helped push the S&P 500 up 0.7% to a record close of 7,798.99, according to the Associated Press.
The annual increase in the producer price index slowed from 5.5% in June. Prices excluding food and energy rose 0.2% during July and 4.2% over twelve months, AP reported. In the broader BLS breakdown, a 0.7% fall in final-demand goods offset increases of 0.2% in services and 2.2% in construction, showing that the easing was concentrated in physical products rather than spread evenly across the economy.
Energy prices for final demand dropped 3.1%, food prices declined 0.9%, and gasoline fell 5.7%, the BLS said. Motor vehicles and equipment rose 0.3%, while portfolio-management services jumped 6.5%. Those contrasting moves matter because some producer-price components feed into the personal consumption expenditures index, the inflation measure the Fed uses for its 2% target.
Investors treated the report as reducing pressure for an immediate interest-rate increase. The Nasdaq composite gained 0.8% to 26,803.03 and the Dow added 0.1% to 53,839.99. The ten-year Treasury yield fell to 4.65% from 4.68% on Wednesday, while Brent crude declined 2.1% to $87.07 a barrel, easing another source of near-term cost pressure.
AP said futures markets placed a 35% probability on a Fed rate increase at the September meeting, down from roughly 50% two days earlier. The central bank has kept rates unchanged this year while officials debate whether persistent inflation warrants tighter policy. A weak July employment report, which showed employers cutting jobs, also supports caution because higher borrowing costs could further slow hiring, consumer demand and business investment.
The report does not settle the inflation outlook. AP noted that gasoline prices rebounded later in July and early August, while economists expect annual core PCE inflation to remain near 3.3%, above the Fed target, when that gauge is released on August 26. Markets will next watch the Jackson Hole symposium beginning August 27 and another round of jobs and inflation data before the Fed meets in mid-September.
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