US: Producer price inflation should remain tame near term – Wells Fargo

On Wednesday, data on the US Producer Price Index for August is due. In line with market consensus, analysts at Wells Fargo, estimate the index rose 0.1%. 

Key Quotes: 

“The PPI index shows few signs of domestic producers taking advantage of any additional pricing power due to tariffs. PPI inflation has eased over the past year, with the headline index slowing to a 1.7% rate. Underscoring that softness, our preferred measure of core PPI inflation, which excludes food, energy and trade services (measured as margins), fell for the first time last month in nearly four years. With the exception of energy, input costs for processed goods and services fell in July and suggest producer price inflation should remain tame in the near term.”

“The PPI got a bump in July due to higher energy costs, but lower gas prices suggest only a 0.1% gain in August. That should keep the year-over-year change in producer prices below 2% and signal inflation is still not a threat to the Fed’s easier policy stance of late.”