Berliner Boersenzeitung - US producer inflation unexpectedly falls in first drop since April

The producer price index (PPI) dipped 0.1 percent on a month-on-month basis, according to Department of Labor data -- when analysts had expected a 0.3-percent increase.

The last such monthly decrease was seen in April, and compared with a year ago, PPI was up 2.6 percent, cooling from July's figure as well.

"Just out: No Inflation!!!" Trump wrote on his Truth Social platform shortly after the data was published.

He reiterated his calls for Federal Reserve Chair Jerome Powell to lower rates "right now," calling the central bank chief "a total disaster."

The numbers come as policymakers try to gauge the effects of Trump's sweeping tariffs on prices, and were reported just a week before the Fed is set to hold its next policy meeting on interest rates.

Stubbornly elevated inflation could make it tougher for the Fed to cut rates.

But relatively benign inflation, alongside a weakening labor market, has meant that traders widely expect the central bank to adopt a cut of 25 basis points this month.

In recent months, Trump has been ramping up pressure on the independent central bank to slash rates, taking aim at Powell repeatedly for not doing so more quickly.

A decline in services prices was a key factor behind the PPI drop in August, with margins for trade services in particular falling, said the Labor Department.

Excluding food, energy and trade services, PPI rose 0.3 percent from a month ago, and 2.8 percent from a year ago -- the largest 12-month advance since March.

"The latest PPI data pose no obstacle to a Fed rate cut next week," said Carl Weinberg, chief economist at High Frequency Economics.

He added that the August PPI report "paints a much less scary picture of prices of goods 'in the pipeline' than the July report."

Looking ahead, analysts will be eyeing the key consumer price index report due on Thursday.

Matthew Martin, senior US economist at Oxford Economics, warned that underlying goods inflation "is likely to push higher from here."

"The balance between willingness and ability of businesses to absorb tariff costs versus their ability to pass along these increases to their customers will be an important dynamic in the coming months," he added.

Since returning to the presidency in January, Trump has imposed a 10-percent tariff on goods from almost all trading partners, alongside varying higher levels hitting dozens of economies.

He has also slapped separate, steeper duties on sector-specific imports such as steel, aluminum and autos, and analysts warn it could take time for the cumulative effects to filter through to consumers.

(H.Schneide--BBZ)