The producer price index (PPI) is a measure of prices charged by producers for domestically produced goods, services, and construction. In the US it is constructed by the Bureau of Labor Statistics in a fashion similar to the consumer price index (CPI) except it measures prices received from the producer’s perspective. It is another one of the various measures of inflation tracked by the US Fed, along with the CPI and core personal consumption expenditure (PCE).
The latest figures for August have been published by the Bureau and they indicate producer prices fell back by 0.1% across the month. The result was less than the expected +0.2% and lower than the July’s flat result. On a 12-month basis, the rate of producer price inflation dropped back to 2.8% after recording 3.2% in July and 3.3% in June.
Apart from the PPI figures, US financial markets were contending with the Trump administration’s suggestion of additional trade discussions with the Chinese government as well as the possible effects of Hurricane Florence on the US economy. US 2-year Treasury yields finished the day unchanged at 2.74% while 10-year and 30-year yields were each 2bps lower at 2.96% and 3.10% respectively. The US dollar was weaker against other major currencies.