Producer Prices: 2% Trends

Bottom Line:  Producer prices rose slightly more than expected than in July. But the trend continued to fall towards sub-2% annualized readings on pipeline inflation. Core PPI was just under 2.4% above year-ago levels, but annualizing at just 1.7% and 1.6% over the last three and six months, respectively. Core price gains were led by the services, mostly those related to transportation and warehousing, which saw their first increase in over a year. Against that, construction prices notched a record decline for this cycle. More broadly, pipeline price pressures in the services sectors continue to see modest increases, while goods prices remain modestly deflationary. Overall, producer price pressures remain well below the sticky levels seen in consumer prices and were trending in the 1.6 - 2.4% annualized range, a source of comfort for those waiting for consumer prices to return to the Fed's 2% target.