Another proof of slowing inflation? US July PPI increase lower than expected!

U.S. July PPI data growth lower than expected, highlighting continued slowdown in inflation pressure.

Data released on Tuesday showed that the PPI index representing final demand rose by 0.1% from the previous month. The median forecast from economists surveyed by institutions was for a growth of 0.2%. Furthermore, compared to a year ago, PPI has risen by 2.2%. Excluding the volatile food and energy categories, July's core PPI was 2.4%, unchanged from the previous month, marking the mildest reading in four months.

After the data was released, gold briefly rose by $6, but quickly gave back all gains.

The more closely watched CPI data will be released on Wednesday, with an expected month-on-month growth rate of 0.2% for July CPI, and a month-on-month growth rate of 0.2% for core CPI.

The PPI report showed that service costs decreased by 0.2%, reflecting a decline in profit margins for machinery and auto wholesalers. Commodity prices rose by 0.6%, the largest increase since February, with rising gasoline prices being a major factor.

Categories used to calculate the Fed's preferred inflation gauge, the PCE price index, were generally mild in the PPI report. In these categories, doctor and nursing fees and airfare costs declined, while hospital outpatient fees remained flat. Portfolio management service prices rose by 2.3%. July PCE price index will be released later this month.

Currently, with inflation pressures easing and July's unemployment rate soaring to a near three-year high of 4.3%, the market is increasingly concerned about a weak labor market, the risk of the Fed falling behind the curve, and is starting to price in the Fed starting rate cuts in September, possibly even a 50 basis point cut.