The producer price index remained unchanged in July, falling short of the 0.2% increase that Dow Jones consensus forecasts had anticipated for the month.
The Bureau of Labor Statistics released the figures on Thursday, offering the latest encouraging sign that price pressures in the American economy are beginning to moderate.
Core PPI, which strips out food and energy costs, rose 0.2% for the month, below the 0.3% forecast that analysts had been expecting heading into the release.
Core PPI excluding trade services increased 0.4%, while on an annual basis, headline PPI increased 4.7% for the all-items index and 4.2% for core, based on unadjusted figures.
The June PPI figure was also revised, with the Bureau of Labor Statistics adjusting the previously reported 0.3% decline to a smaller fall of 0.1%.
The flat reading follows months of elevated inflation driven in part by the Iran war and President Donald Trump’s tariffs, which had pushed wholesale costs sharply higher earlier in the year.
“Net, net, pipeline pressures at the lower stages of production are not adding to the inflation risks the consumer faces,” said Chris Rupkey, chief economist at Fwdbonds.
“It counts as good news that for a second consecutive month, PPI final demand prices have not gone up adding to the cost of living crisis faced by Americans,” Rupkey added.
Goods prices fell 0.7% during July, helped by a 3.1% decrease in energy costs, which included a notable 5.7% slide in the gasoline index alone.
Food prices dropped 0.9%, while services prices rose 0.2% for the month, pushed higher by a 6.5% surge in portfolio management due to quarterly reporting requirements.
On Wednesday, the Bureau of Labor Statistics separately reported that the consumer price index rose just 0.1% in July, as falling energy prices helped ease broader price pressures.
The headline annual inflation rate of 3.4% nonetheless remains well above the Federal Reserve’s 2% target, keeping pressure on policymakers to act.
Core consumer inflation posted a 0.2% monthly gain and a 2.5% annual rate, returning to levels seen before the start of the war.
Stock market futures moved higher following the PPI release, while Treasury yields fell as traders revised their expectations for Federal Reserve action in the months ahead.
Market participants have shifted their rate hike expectations toward October or December, pulling back from heavy bets that the Federal Open Market Committee would act at its September 15-16 meeting.
In a separate report released Thursday, initial jobless claims rose to a seasonally adjusted 209,000 for the week ending August 8, up 9,000 from the prior period and above the 204,000 estimate.