Flat US Producer Prices Dim Rate Hike Odds, FedWatch Tool Shows

The US Producer Price Index (PPI) remained unchanged in July, according to the Labor Department's latest report. This news has dimmed the odds of a rate hike by the Federal Reserve next month.

Economists had expected a 0.2% rebound in the PPI after a revised 0.1% drop in June, but the actual reading came in flat. The 12-month increase in the PPI was still 4.7%, down from 5.5% in June.

The cost of goods fell 0.7%, with energy prices decreasing by 3.1%. Food prices dropped 0.9%, led by a 34.9% tumble in fresh and dry vegetables, while wholesale gasoline prices plummeted 5.7%. However, grain prices surged 14.8%.

The cost of services increased marginally, rising 0.2% due to a 6.5% jump in portfolio management fees, which was partially offset by a 3.4% decrease in airline fares and a 0.9% increase in hospital outpatient prices.