U.S. producer prices fall
on services, energy costs
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[August 12, 2016]
WASHINGTON (Reuters) - U.S. producer
prices unexpectedly fell in July on declining costs for services and
energy products, pointing to a tame inflation environment that could
make it difficult for the Federal Reserve to raise interest rates.
The Labor Department said on Friday its producer price index for final
demand dropped 0.4 percent last month, the first decline since March and
the largest since September 2015. It increased 0.5 percent in June.
In the 12 months through July, the PPI slipped 0.2 percent after rising
0.3 percent in the 12 months through June. Economists polled by Reuters
had forecast the PPI edging up 0.1 percent last month and gaining 0.2
percent from a year ago.
A strong dollar and cheaper oil continue to keep price pressures muted,
leaving inflation running persistently below the Fed's 2 percent target.
Last month, energy prices fell 1.0 percent after jumping 4.1 percent in
June. Prices for services fell 0.3 percent, with apparel, jewelry,
footwear and accessories retailing accounting for nearly 60 percent of
Services rose 0.4 percent in June. Healthcare costs increased 0.3
percent last month, with prices of doctor visits, dental and hospital
outpatient care rising. Healthcare costs feed into the Fed's preferred
A key gauge of underlying producer price pressures that excludes food,
energy and trade services was unchanged last month after rising 0.3
percent in June.
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People are reflected on the side of a car as they wait in line for
gas at a station at Union City in New Jersey November 2, 2012.
The so-called core PPI was up 0.8 percent in the 12 months through July. It
increased 0.9 percent in the 12 months through June.
(Reporting by Lucia Mutikani; Editing by Paul Simao) ((Lucia.Mutikani@thomsonreuters.com;
1 202 898 8315; Reuters Messaging: firstname.lastname@example.org)
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