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First Cut: Final Demand PPI nudges up on energy costs in July

The Final Demand Producer Price Index (PPI) for July was  up 0.2% month-over-month, and up 1.7% compared to July 2018. Core PPI — excluding food, energy, and trade services — was down 0.1% from a month ago and also up 1.7% year-over-year.

Prices for goods were up 0.2% from a month ago, while energy costs gained 2.3% as gasoline prices turned higher in early July. Trade services were up 0.2%. Outside of the core items, the decline was due to a 0.3% decline in final demand services less trade, transportation, and warehousing.

Energy costs continue to be the most volatile aspect of producer prices and most likely to drag the readings up and down month-over-month. The underlying trend, however, is of a piece with other data that shows that commodities continue to present little or no consistent upward pressure on prices. It is the service sector that is upholding the pace of inflation with a strong assist from rising costs for trade.

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