Producer Price Index in August 2022:

Prices received by producers for goods and services fell in August, a moderate respite from inflationary pressures that threaten to push the US economy into recession.

The Producer Price Index, a measure of incoming prices at the wholesale level, fell 0.1%, according to a Bureau of Labor Statistics report on Wednesday. Excluding food, energy and business services, the producer price index rose 0.2%.

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Economists polled by Dow Jones had expected the headline producer price index to fall 0.1%.

On an annual basis, the core PPI rose 8.7%, a significant decline from the 9.8% increase in July and the lowest annual rise since August 2021. The core PPI rose 5.6% from a year ago, matching the lowest rate since June. 2021.

As was the case during the summer, the price drop came largely from lower energy.

The final energy demand index fell 6% in August, which saw a 12.7% decline in the gasoline index that was responsible for more than three-quarters of the 1.2% drop in prices for goods in final demand. This helped fuel consumer prices, which fell sharply after briefly exceeding $5 a gallon at the pump earlier in the summer.

Wholesale services prices rose 0.4% during the month, indicating a further turnaround for the pandemic-era economy as commodity inflation soared. Final order services prices rose 0.4% during the month, with the remainder coming from a 0.8% increase in commercial services.

These numbers come a day after the BLS released higher-than-expected CPI data for August. The two reports differ in that the PPI shows what producers get for finished goods, while the CPI reflects what consumers pay in the market.

The Producer Price Index can be a leading indicator of inflation as wholesale prices are fed through the economy. However, its importance has been toned down over the years because manufactured goods make up a smaller share of total spending.

After Tuesday’s report, stocks fell and expectations rose over the Federal Reserve’s action at its meeting next week. Stock market futures were positive after the PPI report while Treasury yields were also higher.

Markets were debating between half a percentage point and a three-quarter point rate increase. After the release, the entire market was priced at a three-quarter move, and there is now a 1 in 3 chance of a full percentage point rise, according to federal money futures data tracked by CME Group.