The producer index in the United States has edged up, slightly, bringing up wholesale prices by about 0.1 percent in August. This may have been in response to plummeting energy prices, all of which further signifying that inflation remains low right now.
According to the United States Department of Labor, this producer price index—a metric that measures inflation pressures before they reach consumers—comes after a 0.2 percent increase in July. Overall, though, core inflation—a metric that does not include food and energy costs—grew at a stronger 0.3 percent.
With bigger gains in April and May—mostly driven by surging energy costs—wholesale inflation has balanced out, deflating a little over the past few months. These tiny increases, though, continue to come as the US economy reaches the eleventh month of this record-long expansion period. Of course, increased tariffs on Chinese goods—a result of the US-China trade war—continue to broaden and this has affected the retail price of many goods, overall. Fears of a manufacturing downturn always has the potential to spread into the broader economy, which might finally cap this expansion streak.
Looking more closely at the specific numbers, wholesale energy prices in August dropped 2.5 percent after a decent rebound of 2.3 percent in July. Again, this balances the numbers out to, essentially reset the previous gains. These energy prices were probably held back by the 6.6 percent drop in gasoline prices, which more than compensates for the 5.2 percent jump in July. Similarly, goods prices fell 0.5 percent—the biggest decline since the beginning of the year—to offset July’s increase.
More importantly, perhaps, energy prices account for more than 80 percent of the drop in goods cost for the month of August. Indeed, wholesale food prices only fell 0.6 percent in August, overall, after that 0.2 percent jump in July.