The producer price index rose less than expected in July, but with the core level rising a higher-than-expected 0.3%. Low inflation -- not delfation -- is probably just what the U.S. Federal Reserve wants at this stage of the recovery.
The producer price index fell 0.5% in June, more than expected. Along with manufacturing data out Thursday, the price data give more support to analysts who are worried that deflation remains the biggest threat to the economy.
U.S. wholesale prices fell a seasonally adjusted 0.5% in June -- the biggest decline since February -- led by lower food and energy prices, the Labor Department reported Thursday. This follows a 0.3% decline in May, indicating that so far, the government's economic stimulus efforts haven't sparked inflation.
May's 0.3% slide in the producer price index confirmed that low-inflation conditions continue in the U.S. economy. A sudden jump is always possible due to a surge in oil prices, but for now, deflation is the greater risk.
More than a year into the U.S.%u2019s record fiscal stimulus, there%u2019s still little sign of inflation, as producer prices unexpectedly fell 0.1% in April.
More good news for businesses: inflation remains under control at the wholesale level, as producer prices plummeted 0.6% in February. The core rate, which excludes food and energy, rose just 0.1%.
Producer prices rose just 0.2% in December to close out a year of low inflation at the wholesale level, something that will help the Fed maintain its low interest rate policy as it seeks to stimulate an economic recovery in the U.S.
The PPI surged a surprising 1.8 percent. Excluding the often-volatile food and energy component, "core" producer prices rose 0.5 percent. Both measures exceeded expectations of 1 percent and 0.2 percent, respectively. The New York State manufacturing index also surprised by dropping sharply.
