US producer prices increase below expected, suggesting continued slowdown in inflation

8/14/2024 8:27:20 AM

(MENAFN) In July, the U.S. producer price index (PPI) increased less than anticipated, with the slower rise attributed to a decrease in service prices that offset higher goods prices. The U.S. labor Department’s Bureau of Labor Statistics reported that the PPI for final demand edged up by 0.1 percent in July, following a 0.2 percent increase in June. This modest rise fell short of economists' expectations, who had predicted a 0.2 percent increase. Over the past year, the PPI has risen by 2.2 percent, a deceleration from the 2.7 percent increase recorded in June.

The ongoing trend of slowing inflation, coupled with developments in the labor market, has led to heightened anticipation among financial markets that the Federal Reserve may initiate a cycle of monetary policy easing starting in September. There is now a possibility that the Fed might cut interest rates by 50 basis points, as concerns grow over the labor market’s weakness, exemplified by the unemployment rate reaching a near three-year high of 4.3 percent in July. For the past year, the Federal Reserve has maintained overnight interest rates within the range of 5.25 percent to 5.50 percent, following significant hikes totaling 525 basis points in 2022 and 2023.

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