PPI Falls 0.1% in August as Wholesale Inflation Eases

Lead The U.S. Producer Price Index for final demand edged down 0.1% in August, following a 0.7% gain in July, the Bureau of Labor Statistics reported Wednesday, as easing wholesale pressures signal cooling inflation ahead of the Fed’s rate decision.

Nut Graf Wholesale inflation moderated in August, driven by declining services margins, underscoring subdued pricing power among producers and bolstering expectations for Federal Reserve rate cuts. The data offers relief to markets after months of stubborn cost pressures and sets the tone for consumer inflation readings later this week.

Month-Over-Month Decline

• Final demand prices fell 0.1% in August, reversing July’s 0.7% increase.
• Services prices drove the drop, with the index for final demand services down 0.2%, the largest decline since April.
• In contrast, final demand goods inched up 0.1%, the fourth consecutive gain.

Annual Change

• On an unadjusted basis, the PPI rose 2.6% year-over-year, cooling from July’s 3.1% advance and missing the 3.3% consensus.
• Core PPI, which excludes food, energy, and trade, climbed 0.3% for the month and 2.8% year-over-year, its largest annual increase since March 2025.

Category Details

• Trade services margins plunged 1.7%, led by machinery and vehicle wholesaling, while portfolio management fees rose 2.0%.
• Energy goods prices declined 0.4% after prior increases, driven by lower utility natural gas costs.
• Processed goods for intermediate demand gained 0.4%, with aluminum mill shapes up 5.5%.

Implications for Monetary Policy Easing producer prices reduce downstream cost pressures on consumers, strengthening the case for the Federal Reserve to cut interest rates at its September meeting. Markets will now focus on the Consumer Price Index release tomorrow for confirmation of broader disinflation trends.