US Producer Prices Dip 0.1% in August as Inflation Cools

Lead US producer prices fell 0.1% in August as wholesale inflation eased, while on a 12-month basis the Producer Price Index rose 2.6%, below economists’ forecasts.

Nut Graf The Bureau of Labor Statistics report underscores moderating price pressures at the factory gate ahead of next week’s Federal Reserve meeting, offering further evidence that inflation may be receding.

Goods vs. Services

• Final demand goods inched up 0.1% in August, led by a 2.3% rise in tobacco product prices.
• Final demand services dropped 0.2%, driven by a 1.7% decline in trade-service margins, the largest services-sector pullback since April.

Core Inflation Stays Sticky Core PPI-which excludes food, energy and trade services-increased 0.3% for the month, marking a fourth straight gain. Over the past year, core inflation climbed 2.8%, the fastest annual advance since March 2025.

Energy and Food Components Energy prices for final demand declined 0.4% in August, the second consecutive monthly drop, as utility natural gas prices fell 1.8%. Food prices inched up 0.1%, lifted by gains in processed foods.

Year-Over-Year Trends On an unadjusted basis, the final demand index was up 2.6% for the 12 months ended in August, down from July’s 3.3% increase, marking the smallest annual gain since April. The slowdown reflects broad-based easing across both goods and services.

Looking Ahead Analysts say the cooler PPI data bolster the case for a Fed rate cut but caution that sticky core inflation and upcoming Consumer Price Index figures will remain key for policymakers.