August 13, 2024
US producer prices rose by 0.1% in July against +0.2% in June and by 2.2% in July over the year against 2.7% in June. Core PPI remained flat in July against +0.3% in June and rose by 2.4% over the year in July against 3.0% in June.
Data indicates some cooling in producer prices which is a positive sign for Fed seeking to start policy easing. Producer prices started to gain strength a year ago after reaching +0.3% year-to-year low in June 2023. Since then it has been steadily rising to the high of +2.7% in last June.
Though today decrease is a positive signal triggering hopes for the indicator to get below target of 2% in near future technically it is still in uptrend(see chart), meaning it can proceed with going up at any moment.
For now market expects first cut by 0.25 to happen in September with some chance it will be 0.5 decrease, however it will depend on incoming data, especially next labor market report.