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--August PPI Ex. Food, Energy, Trade +0.1%; Trade Services -0.9%
--PPI +2.8% Y/Y Vs +3.3% In July; Ex Food, Energy +2.3% Vs +2.7%
By Kevin Kastner, Harrison Clarke, and Shikha Dave
     WASHINGTON (MNI) - Final demand PPI was down 0.1% in August, well 
below the 0.2% gain expected and the first decline in the headline 
reading since February 2017, data released by the Bureau of Labor 
Statistics Wednesday showed. 
     There was also a surprise 0.1% decline outside of food and energy 
prices, in contrast to an expected increase of 0.2%. 
     The year/year rates of inflation for these categories slowed 
dramatically from July, but the year/year rate for prices also excluding 
the volatile trade services category rose further. As a result, this 
data should not be a deterrent to the FOMC's consideration of another 
rate hike at the end of September. 
     The personal consumption price measure in the data, which some 
analysts use as a preview measure for the CPI and PCE price indexes, was 
flat overall and ex. food and energy, but was up 0.3% also excluding 
trade services, suggesting a softer picture for the PCE inflation data. 
--ENERGY RISES, FOOD FALLS 
     Energy prices rose 0.4% in August after a 0.5% decline in July, led 
in August by a large 1.8% gain in residential natural gas. Electric power 
prices rose by 0.6% and gasoline prices were up 0.6%, but home heating 
oil prices fell 0.9%. 
     Food prices were down 0.6%, with large declines seen in eggs and 
fresh fruits. 
     Trade services prices fell 0.9% in the month after a 0.8% drop in 
July, while the PPI core rate the BLS prefers, which excludes the change 
in trade services as well as food and energy, rose 0.1% in August. 
     Within the core, there were generally mixed movements in a number 
of categories. Passenger car prices rose 0.7%, while light truck prices 
fell 0.1%. However, overall final demand services prices were down 0.1%. 
--Y/Y INFLATION SLOWS 
     The year/year rates for these measures decelerated in the month. 
Overall PPI was up 2.8% year/year in August after a 3.3% year/year rise 
in July. 
     At the same time, the year/year rate for PPI excluding food and 
energy slowed to 2.3% from 2.7% in July, but the year/year rate for PPI 
excluding food, energy and trade services rose to 2.9% from 2.8%. 
     ** MNI Washington Bureau: 202-371-2121 **
[TOPICS: MAUDS$,M$U$$$,MT$$$$] 

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