Today's U.S. PPI report revealed a weaker-than-expected flat July headline reading
Today's U.S. PPI report revealed a weaker-than-expected flat July headline reading, but an as-expected core increase of 0.1%. The benign PPI reading reflected a 0.1% decline in services prices (owing to a 0.8% drop in trade services) which was offset by a 0.1% gain in goods prices. Food prices declined 0.1%, a second straight monthly decrease and energy prices declined 0.5%. The y/y gain in the headline index slipped to 3.3% from 3.4% (which was the strongest pace since November 2011), while the core index fell to 2.7%, from 2.8% (the strongest since September 2011). Analysts expect firmer PPI readings of 0.2% for the headline and 0.2% for the core in August. Overall, the figures are adhering to the pull-back analysts expect in headline y/y inflation measures into late-Q3 and Q4, with added help from the July headline undershoot. For other July inflation reports, analysts expect to see CPI gains of 0.2% overall and the core. Analysts expect a 0.1% July PCE chain price figure with a 0.1% core price gain and analysts see a July trade price increase of 0.1% for imports and exports.