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10 August 2017
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| Producer prices (The Total Investment & Insurance Solutions) |
Prices at the wholesale level slipped in July, the first decline in 11
months and further evidence that inflation remains a no-show in the economy. The Total Investment & Insurance
Solutions
The Labor Department said Thursday that its producer price index, which
measures inflation pressures before they reach the consumer, edged down 0.1
percent last month, reflecting a third month of declines in energy prices and a
flat reading for food. The July result followed a tiny 0.1 percent gain in
June. It was the first drop in wholesale prices since a decline of 0.2 percent
last August.
Core inflation, which excludes volatile food and energy costs, also fell
last month by 0.1 percent. Over the past 12 months, wholesale prices are up a
moderate 1.9 percent, while core prices have risen 1.8 percent. The Total Investment & Insurance
Solutions
Inflation has been low throughout this recovery. For the past five
years, it has fallen below the Federal Reserve's target for annual price gains
of 2 percent a year. At the beginning of this year, inflation by a gauge
preferred by the Fed did climb as high as 2.2 percent gain in February compared
to a year ago. But it has since backtracked and in June registered a 12-month
gain of just 1.4 percent.
The Fed raised interest rates in March and June, but economists believe
it will put further rate hikes on hold until at least December, waiting to see
if inflation resumes rising again to the 2 percent target. Fed Chair Janet
Yellen told Congress last month that she believes tight labor markets will
start producing higher wage gains and increased inflation. Unemployment in July
returned to a 16-year low of 4.3 percent. The Total Investment & Insurance Solutions
The 0.1 percent dip in wholesale prices in July reflected a 0.3 percent
drop in energy costs in July, which followed even bigger declines in May and
June. Last month, the gasoline, natural gas and home heating oil all showed
declines.The Total Investment &
Insurance Solutions
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