US Labour Department said in a statement on Thursday that US wholesale prices rose by 0.3 per cent in August that followed a record gain of 0.6 per cent a month earlier, as food and gasoline prices had declined. Aside from that, US Labour Department had also added at its statement that a clealry obscurous rise in August PPI (Producer Price Index), a critical tracker of inflation before it reaches the end-consumers, had followed the Index’s largest monthly gain since the October of 2018 a month earlier, suggesting a step-down in the inflation indicator reading.
US wholesale prices halved from a month earlier as food and energy costs drop
A moderation in PPI data in August was almost entirely contributed by a 0.4 per cent drop in food costs that marked up the food prices’ third straight monthly decline since a major leapfrog in May, in part due to a telescoped supply chain stemmed off the pandemic outbreak.
Apart from that, since a pandemic resurgence across the densely populated US cities had again kept a majority of US consumers locked at their homes and the energy demand outlooks appear even bleaker than those during the peak of the pandemic outbreak in the United States, US consumers’ energy costs had been edged down by 0.1 per cent in August following three straight months of decent gains.
Meanwhile, as a slowdown in US Producer Price Index compared to the gains of recent months, had been pointing towards a lower-than-anticipated inflation which would allow the US Fed to keep its benchmark interest rate low for an unspecified period of time amid a pandemic bubble hobbling the business investments, adding that the US inflation would likely to remain below US Fed’s target of 2 per cent at least until end-2022, a senior US economist at Oxford Economics, Lydia Boussour said followed by the release of PPI data, “While some see high inflation luring around the corner, we believe there is little scope for prices to heat up meaningfully as the economy continues to only slowly recover from the Covid-19 crisis.
Inflation is likely to remain below 2% well past 2022, reinforcing the Fed’s strong easing bias. ”