**MNI 5 THINGS:US August PPI Softer-Expected -0.1%,Core -0.1%>

--5 Things We Learned From The August 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 August released by the Labor Department 

Wednesday: 

     - The August PPI data were much softer than expected, with a 0.1% 

decline for the overall figure rather than the 0.2% rise expected, the 

first decline since February 2017. Weakness in trade services and food 

were key factors, but at the same time, a 0.1% decline for the ex. food 

and energy reading was well below the 0.2% gain expected. PPI ex. trade 

services, food, and energy was up 0.1% after a 0.3% gain in the previous 

month, but the year/year rate for that underlying measure still ticked 

up. 

     - As a result, the year/year rates of inflation slowed dramatically 

in August. Overall PPI is now up 2.8% y/y vs 3.3% in July. At the same 

time, ex food and energy PPI moved down to 2.3% y/y vs 2.7% in July. 

However, PPI ex food, energy and trade services is now up 2.9% y/y vs 

2.8% in July. 

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

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

flat both overall and excluding food and energy, suggesting softer 

readings for the other inflation data still to come for the month. 

Outside of food, energy and trade services, the personal consumption 

measure was up 0.3%. The year/year rates for all three measures were 

above 2%. 

     - Energy prices posted a 0.4% increase in August after a 0.5% 

decline in July, with a 0.6% rise in gasoline prices a key factor. Food 

prices fell 0.6% in the month on widespread declines, while the volatile 

trade services component was down 0.9% in August after a 0.8% decline in 

July. 

     - When the large drops in trade services and food and energy 

gain are stripped away, the 0.1% gain in the remaining items and the 

further increase in the year/year rate shows some strength in the 

underlying data, helped by a 0.7% rise in passenger car prices. As a 

result, this data should not be a deterrent to the FOMC when it meets in 

a few weeks. The CPI data will be released on Thursday and should 

provide more context. 

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

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