MNI DATA ANALYSIS: US PPI Falls 0.1%; -0.1% Ex. Food, Energy>

--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$$$,MT$$$$]