Washington (awp/afp) – Wholesale prices in the United States fell in July, for the first time since April 2020, giving an additional signal of a slowdown in inflation, seen from the manufacturers and sellers, according to the producer price index (PPI) released on Thursday.
The PPI index fell 0.5% in July from June, after rising 1.0% in June and 0.8% in May – data revised down slightly.
Analysts expected a slowdown in price increases, to +0.2%, but not a decline.
Excluding the three months from February to April 2020, when the pandemic shut down activity globally, driving prices down, this is the biggest decline for this index in more than seven years.
This decline is linked to a 1.8% decline in wholesale prices for goods, due in particular to the fall in energy prices.
Wholesale prices for services are up slightly by 0.1%.
And over one year, the rise in prices slowed down but remained very high, at 9.8% against 11.3% in June.
“Producer prices are showing encouraging signs of a slowdown,” Mahir Rasheed, an economist for Oxford Economics, said in an analyst note.
The PPI index is a measure of inflation that takes into account prices from the point of view of manufacturers and sellers.
The price increase observed on the consumer side, the CPI index, was published on Wednesday, and also showed a stronger than expected slowdown in July, to 8.5% over one year, and even zero over one month.
Slowing down inflation is one of the missions of the American central bank (Fed), which, for this purpose, seeks to cause a voluntary slowdown in consumption, to loosen the pressure on prices.
It has thus raised its key rates four times, now between 2.25 and 2.50%, to increase the cost of credit, and should continue in September.
“A potential spike in annual inflation measures is a welcome sign for consumers, businesses and (the Fed), but the historically high price momentum in the economy will likely persist through the end of the year” , underlines Mahir Rasheed again.
He adds, however, that with the measures taken by the Fed to curb inflation, “the rise in producer prices will decline considerably in 2023 as economic activity slows in response to more moderate consumer demand.”
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