Investing.com – U.S. producer price inflation and its core reading increased less than expected in August, though inflationary pressures at the factory gate were on the rise, official data showed on Wednesday.
In a report, the Commerce Department said that producer prices increased 0.2% last month, missing the forecast for a 0.3% gain and still bouncing back from a prior 0.1% drop.
Year-over-year, the producer price index (PPI) rose 2.4% in August, slightly below expectations for a gain of 2.5% but higher than the 1.9% increase in the preceding month.
The core producer price index, that excludes food and energy, rose 0.1% in August, missing forecasts for a gain of 0.2% and compared to the prior month’s 0.1% decline.
Core producer prices increased at an annualized rate of 2.0% last month, below forecasts for a 2.1% increase but higher than the gain of 1.9% in July.
Core prices are viewed by the Federal Reserve as a better gauge of longer-term inflationary pressure because they exclude the volatile food and energy categories. Furthermore, when producers pay more for goods, they are more likely to pass price increases on to the consumer, so PPI could be considered a leading indicator of inflation.
The US dollar index, which tracks the greenback against a basket of six major rivals, was at 91.74, compared to 91.80 ahead of the report.