Wholesale prices were unchanged in July as energy costs fell

WASHINGTON - U.S. wholesale prices were unchanged in July, the Bureau of Labor Statistics reported, as a drop in energy costs offset higher prices for some services.

The Producer Price Index for final demand was flat on a seasonally adjusted basis last month. That reading came in below the 0.2 percent monthly gain many private forecasters expected. Prices for final demand goods fell 0.7 percent, while services rose 0.2 percent.

Over the 12 months ended in July, final demand prices rose 4.7 percent on an unadjusted basis. That annual rate is down from 5.5 percent in June.

Energy led the monthly decline in goods. Gasoline prices fell 5.7 percent, and the broader energy index dropped 3.1 percent, according to summaries of the BLS release. Food prices fell 0.9 percent. Goods excluding food and energy edged up 0.1 percent.

Core producer prices, which exclude food and energy, rose 0.2 percent in July, below a 0.3 percent consensus estimate reported by financial media. The annual core rate was about 4.2 percent, in line with expectations cited by market data services.

A 2.2 percent rise in construction prices and a 0.2 percent gain in services helped offset the goods drop. Portfolio management costs jumped 6.5 percent, while transportation and warehousing services fell 1.8 percent.

The June reading was revised to a 0.1 percent decline. Markets often watch the PPI as an early signal for consumer inflation. Stocks and Treasury yields moved after the report, with lighter wholesale inflation supporting the view that some price pressures have cooled from last year peaks.

The BLS release is a government statistical product and does not set Federal Reserve policy. Officials still watch a range of inflation measures, including the Consumer Price Index and the personal consumption expenditures price index, when they weigh interest rate decisions.