United States Producer Price Index was released today showing an increased change in the price of finished goods and services sold by producers, meaning that wholesale prices rose more than forecast in July.
PPI increased by 0.2 percent in July compared to a 0.4 percent drop in June, due to higher prices for tobacco, trucks and pharmaceuticals, showing declines in commodity expenses have yet to filter to other goods. This was higher than the expected 0.1 percent increase. Meanwhile, the core PPI index , which excludes volatile food and energy, climbed 0.4 percent, the most since January.
Rising price and higher inflation will eat into American consumers’ purchasing power and will weigh on consumer spending.
Resulting slower sales and a drop in raw-materials mean companies will be less likely to raise prices, which may give Federal Reserve policy makers more room to act to spur growth after the U.S. economy was close to stagnation.