**MNI 5 Things: July PPI Below-Expected Flat, Core +0.1%>

--5 Things We Learned From The July PPI Data

By Kevin Kastner, Harrison Clarke, and Shikha Dave

     WASHINGTON (MNI) - The following are the key points from the 

Producer Price Index data for July released by the Labor Department 

Thursday: 

     - The July PPI data were slightly lower than expected in June, 

with a flat reading for the overall figure rather than the 0.2% rise 

expected. At the same time, a 0.1% gain for the ex. food and energy 

reading was below the 0.2% gain expected. PPI ex. trade services, food, 

and energy was up 0.3% after a 0.3% gain in the previous month. The 

data suggest wholesale inflation is softer than expected on its face, 

but with some underlying gains. 

     - The smaller monthly gain for July 2018, compared with the 0.1% 

gain in July 2017, lowered the annual rate of overall inflation. Overall 

PPI is now up 3.3% y/y vs 3.4% in June. At the same time, ex food and 

energy PPI moved down to 2.7% y/y vs 2.8% in June and PPI ex food, 

energy and trade services is now up 2.8% y/y vs 2.7% in June. 

     - The personal consumption price measure in the data, which some 

analysts use as a preview measure for the CPI and PCE price data, fell 

0.1% overall and fell 0.1% excluding food and energy, a negative factor 

for the other inflation data still to come for the month. Outside of 

food, energy and trade services, the personal consumption measure was up 

0.2%. The year/year rates for all three measures were above 2%. 

     - Energy prices posted a 0.5% decrease in July after a 0.8% gain in 

June, with a 3.2% fall in jet fuel prices a key factor. Food prices fell 

0.1% in the month on declines in a number of categories, especially 

meats and hay while the volatile trade services component was down 0.8% 

in July after a 0.7% gain in June. 

     - Within the core, passenger car prices were up 0.7% and light 

truck prices up 0.1%. Beneath the flat headline figure, underlying 

inflation growth is steady, and should continue to support gradual rate 

increases. 

     ** MNI Washington Bureau: 202-371-2121 ** 

[TOPICS: MAUDS$,M$U$$$,MAUDR$]