US producer prices jump 0.6% in July, biggest leap since 2018

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US producer prices jump 0.6% in July, biggest leap since 2018

On Tuesday, US Labour Department data had unveiled that the US wholesale prices had been picked up by 0.6 per cent last month, remarking the index’s biggest surge since the October of 2018, however, overall inflation portrait remained downbeat amid a sluggish demand.

Besides, the US Labour Department had also added that its index for producer prices, a critical indicator to inflation, that reported a sharp rise last month came against the backdrop of a 0.2 per cent decline in June alongside a 0.4 per cent upsurge in May, while last month’s jump had been almost twice of what the economists were expecting.

US wholesale prices shoot up as energy prices were propelled higher

In point of fact, the giant leapfrog in US PPI (Producer Price Index) last month was almost entirely prodded by an upsurge of 10.1 per cent in gasoline prices, while wholesale energy prices had been up by 5.3 per cent, however, food prices pummelled 0.5 per cent.

Nonetheless, excluding the highly volatile food and energy prices, the core US PPI had reported an unexpected rise of 0.5 per cent last month. Aside from that, compared to the past year, US PPI appeared to be gaining momentum, however, analysts assuaged that the US inflation would likely to be held back by the recession stemmed from the pandemic outbreak alongside the forced business closures, while Americans swaying away from the restaurants, shopping malls and air travels had also added to further declines.

In tandem, weak demands in the United States of basic goods such as gasoline amid a steady spike in pandemic cases what many analysts believed could have been a second wave, would likely to result in further downward momentum for core inflation readings.

Meanwhile, adding that the US inflation readings would highly likely to remain on the lower side of the Federal Reserve target range of 2 per cent in a near- to intermediate- term outlook, a Chief US Economist at High Frequency Economics Rubeela Farooqi wrote in a client report, “Core inflation readings will likely remain muted over coming months in response to ongoing weak demand and ample excess capacity.