U.S. producer prices unexpectedly fell in August, recording their first drop in 1-1/2 years, as declines in the prices of food and a range of trade services offset an increase in the cost of energy products.
The Labor Department said on Wednesday its producer price index for final demand slipped 0.1 percent last month after being unchanged in July. August’s fall in the PPI was the first since February 2017.
In the 12 months through August, the PPI rose 2.8 percent, slowing further after July’s 3.3 percent increase.
Economists polled by Reuters had forecast the PPI increasing 0.2 percent in August and advancing 3.2 percent year-on-year.
A key gauge of underlying producer price pressures that excludes food, energy and trade services edged up 0.1 percent last month. The so-called core PPI gained 0.3 percent in July.
In the 12 months through August, the core PPI increased 2.9 percent after rising 2.8 percent in July.
Despite the moderation in producer prices last month, overall inflation is steadily rising against the backdrop of a strong labor market and robust economy. The Trump administration’s import tariffs on lumber, washing machines, solar panels, steel and aluminum, as well as a range of Chinese goods, are also expected to push up price pressures.