Economy

U.S. wholesale prices edged down 0.1 percent in July

U.S. wholesale prices edged down 0.1 percent in July”

US wholesale prices declined in July for the first time in nearly a year, further evidence of soft inflation that is bedeviling the Federal Reserve.

The Labor Department said on Friday its Consumer Price Index edged up 0.1 per cent last month after being unchanged in June. On a yearly basis, PPI continued its downward path, slipping to 1.9% from 2% in June and missing the forecast of 2.2%.

The core rate, which excludes volatile categories of food, energy and trade, was flat in the month. Over the past 12 months, wholesale prices are up a moderate 1.9 percent, while core prices have risen 1.8 percent.

The modest gain in consumer prices could worry Fed officials who have largely viewed the retreat in inflation as temporary.

Yet Dudley, a close ally of Fed Chair Janet Yellen and permanent voter on USA monetary policy, said the declining dollar, which pushes up import prices, and the tightening labor market, which raises wages, "should combine to eventually push (month-over-month) inflation up".

In a preview, the bank said one major reason why USA core inflation has softened this year has been a slowdown in the pace of increase in rents, but it is forecasting a moderate rise in rents in July. On the other hand, the central bank of U.S.at its policy meeting is all set to announce a plan to start shrinking its $4.2 trillion portfolio of mortgage-backed securities and Treasury bonds. The Fed has raised borrowing costs twice this year. Last month, the gasoline, natural gas and home heating oil all showed declines.

Owners' equivalent rent of primary residence rose 0.3 per cent after advancing by the same margin in June.

Prescription drugs jumped 1.3 per cent in July after increasing 1.0 per cent in the prior month. He also commented that it would take 6-10 months for recent weak inflation readings to drop out of the annual inflation rate, although he also remarked that the weak dollar should boost import prices and help push up inflation. The cost of new motor vehicles fell 0.5 per cent, marking the sixth consecutive monthly decline.



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