A new report from the Bureau of Labor Statistics found wholesale prices falling in August. A deeper dive showed goods prices rising in three of the four supply-chain stages.
The Producer Price Index (PPI), which measures pipeline costs for raw, intermediate and finished goods, fell 0.1% in August after a revised 0.7% increase in July. The 0.1% decline was lower than the Dow Jones analysts’ estimate of a 0.3% increase.
Year-over-year, PPI rose 2.6% after a 3.1% increase in July.
Chris Rupkey, chief economist at Fwdbonds, said, “Net, net, the inflation shock that was not is rocketing markets higher as inflation barely has a heartbeat at the producer level, which shows the tariff effect is not boosting across-the-board price pressures yet. There is almost nothing to stop an interest rate cut from coming now.”
Goods prices fell in Stage 4 intermediate demand but rose in the remaining supply-chain stages and in all four stages for services prices.
Stage 4 goods inputs, measuring the products purchased by industries primarily producing output sold to final demand—such as RV manufacturers—rose 0.4% in August after a 0.5% increase in July. Stage 4 goods inputs have risen each month since March, when they were flat from the previous month. Stage 4 goods inputs have not decreased from the previous month in over a year. Overall, Stage 4 intermediate demand rose 3.1% in August, the largest year-over-year increase since March 2023.
Goods inputs for Stage 3 intermediate demand, measuring suppliers to Stage 4 producers such as RV manufacturers, rose 0.1% in August after a revised 1.9% increase in July, the third increase in the past four months. Overall, year-over-year Stage 3 demand rose 2.5% in August, the largest year-over-year increase since January 2023.
Goods inputs for Stage 2 intermediate demand, measuring suppliers to Stage 3 suppliers, fell 0.7% in August after a revised 0.8% increase in July. Overall, year-over-year Stage 2 intermediate demand rose 0.6% in August after decreases in the previous two months.
Finally, goods inputs for Stage 1 demand rose 0.2% in August after a 0.8% increase in July. Stage 1 goods inputs have not decreased from the previous month since September 2024. Overall, Stage 1 intermediate demand rose 2.4% in July, the largest year-over-year increase since February 2023.
