The 0.1% July PPI headline and core price declines
The 0.1% July PPI headline and core price declines undershot estimates thanks to a 0.2% service price drop, with declines of 0.5% for trade services and 0.8% for transportation and warehousing services. Analysts also saw slightly weaker than expected figure for goods prices, with a 0.3% energy price drop and a flat food price figure that left a 0.1% decline for the goods component overall. On the old SOP basis analysts saw a 0.2% headline PPI drop after a 0.2% June increase. The service component of PPI has proven quite volatile and unpredictable since it was introduced to the aggregate back in January of 2015, alongside the more readily observable goods prices. Analysts expect a 0.3% PPI rise in August with a 0.2% core price increase thanks to a small climb in gasoline prices and an assumed bounce in service prices. The y/y PPI rise should climb to 2.4%, after slipping to 1.9% in July and 2.0% in June, while the y/y core PPI rises to 2.1% from 1.8% in July and 1.9% in June.