U.S. producer prices unexpectedly fell 0.1% in August

WASHINGTON AP U S producer prices fell unexpectedly last month dropping from July The Labor Department broadcasted Wednesday that its producer price index which captures inflation in the supply chain before it hits consumers presented that wholesale inflation decelerated in August after advancing in July Wholesale services prices fell from July on smaller profit margins at retailers and wholesalers which might be a sign that those companies are absorbing the cost of President Donald Trump s sweeping taxes tariffs on imports Compared to a year earlier producer prices rose Excluding volatile food and vigor prices so-called core producer prices also fell from July and were up from a year earlier The numbers were lower than economists had forecast The wholesale price document came out day before the Labor Department releases its consumer price index The CPI is expected to show that consumer price inflation picked up slightly last month rising from July an uptick from a increase the month before Compared with a year earlier consumer prices are expected to have risen in August up from a year-over-year increase in July Wholesale prices can offer an early look at where consumer inflation might be headed Economists also watch it because specific of its components notably measures of fitness care and financial services flow into the Federal Reserve s preferred inflation gauge the personal consumption expenditures or PCE price index The drop in producer prices makes it even more likely that the Fed will cut its benchmark interest rate next week for the first time this year Trump has been pressuring the central bank to cut rates And there are increasing signs that the economic activity is weaker than previously thought On Tuesday the Labor Department released that employers had added fewer jobs than originally broadcasted in the months that ended in March Source