U.S. producer price inflation likely to have risen 0.2 pct in July, to rise further in months ahead

U.S. producer price inflation is likely to have remained almost the same in July. Producer price inflation has been strengthening in the past year, with the PPI rises 3.4 percent year-on-year. A 50 percent rise in oil prices over the year has aided in driving the gain, but PPI ex-food, energy,  and trade services has increased 2.7 percent from a year ago.

“We expect PPI to rise 0.2 percent in July as domestic capacity constraints intensify and additional tariffs, which provide scope for U.S. producers to raise prices, take effect”, noted Wells Fargo in a research report.

Businesses report input prices rising widely. The ISM manufacturing prices paid index came in above 70 for the seventh consecutive month, while the share of non-manufacturers reporting higher prices also stayed elevated. Rising material and labor costs for U.S. producers are likely to push core PPI up further in the months ahead, added Wells Fargo.

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