US Inflation Figures Show Mixed Signals in July
US inflation figures for July came in below expectations, but not across the board. The headline PPI inflation rate dropped to 4.7% year-over-year (YoY), remaining flat on a month-over-month (MoM) basis.
The core PPI rate, which excludes volatile food and energy prices, rose to 4.7%, exceeding consensus forecasts of 4.6%. However, this increase was not enough to offset the decline in goods prices, which fell by 0.7% MoM.
Goods prices were dragged down by a 3.1% decline in energy costs and a 0.9% drop in food prices. Over half of the decline in goods was caused by a 5.7% drop in gasoline prices, as well as notable declines in diesel fuel, jet fuel, and fresh/dry vegetables.
Excluding volatile food and energy prices, goods prices actually rose slightly by 0.1%. Services continued to rise, primarily driven by a 0.6% increase in services excluding trade, transportation, and warehousing. Construction costs saw a sharp advance over the month, helping offset the drop in goods.