The FINANCIAL — A gauge of U.S. business prices rose for the third straight month in July, a sign inflation has stabilized following months of historically weak readings, according to Nasdaq.
The producer-price index, which measures the prices companies receive for goods and services, rose a seasonally adjusted 0.2% in July after climbing 0.4% in June, the Labor Department said on August 14.
Core prices, which strip out volatile energy and food components, were up 0.3% in July.
Economists surveyed by The Wall Street Journal had forecast overall and core producer prices would climb 0.1%.
The producer-price index measures price changes from the perspective of the seller, but generally tracks similar, closely watched measures of inflation for consumers.
Producer prices and other inflation gauges have broadly declined over the past year due to cheaper oil, a stronger dollar and soft global demand. Overall producer prices were down 0.8% in July from a year earlier, while core prices were up only 0.6%.
Oil prices started falling sharply last year due to rising supplies. The dollar has strengthened due to weakness overseas and moves by global central banks to stimulate economies. Most recently, China devalued the yuan, which will make Chinese goods cheaper in the U.S.
July’s figures reflected a divide between stronger prices for services and weaker prices for goods. In July, producer prices for services rose 0.4% while goods declined 0.1%. Prices for energy and food both fell.
A measure of consumer prices—the producer-price index for personal consumption—rose 0.2% last month.
But there is little inflation pressure in the pipeline. The price index for processed goods for intermediate demand, which tracks costs of products used as inputs for production, decreased 0.2% in July and was down 6.6% from a year earlier.
The Federal Reserve is looking for inflation to firm gradually as it considers when to raise short-term interest rates, which have been near zero since December 2008. Fed officials have indicated they could start lifting rates as early as September if the economy continues to show signs of steady growth.
The central bank’s preferred inflation gauge, the price index for personal consumption expenditures, has undershot a 2% target for more than three years.
