CNBC: Wholesale prices unexpectedly declined 0.1% in August, as Fed rate decision looms

Economy
1

This will increase the pressure for a rate cut

Points

  • The producer price index fell 0.1% in August, after a downwardly revised 0.7% increase in July and well off the Dow Jones estimate for a 0.3% rise.
  • The release provides breathing room for the Federal Reserve to approve an interest rate cut at its meeting next week.
  • Services prices, a key metric for the Fed when evaluating the stance of monetary policy, posted a 0.2% drop.
    Wholesale prices surprisingly fell slightly in August, providing breathing room for the Federal Reserve to approve an interest rate cut at its meeting this month, according to a Bureau of Labor Statistics report Wednesday.

The producer price index, which measures input costs across a broad array of goods and services, dropped 0.1% for the month, after a downwardly revised 0.7% increase in July and well off the Dow Jones estimate for a 0.3% rise. On a 12-month basis, the headline PPI saw a 2.6% gain.

The core PPI, which excludes volatile food and energy prices, also was off 0.1% after being expected to climb 0.3% as well. Excluding food, energy and trade, the PPI posted a 0.3% gain and was up 2.8% from a year ago. . . .

2

A recent truth social post by President Trump:

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3

Via MS Copilot:

In a zero-inflation environment, productivity gains and technological efficiencies should naturally push prices downward over time. Cheaper manufacturing, automation, supply chain optimization, and digital distribution all reduce unit cost . . . .

But when CPI rises 3%, what you’re really seeing is:

  • +3% net inflation
  • –X% tech-driven deflation

So the gross inflation is actually more than 3%,
because it had to overpower the downward pressure from innovation.

In other words, inflation didn’t just “add 3%”—it neutralized all the cost-saving effects of tech and then piled 3% on top. That’s a brutal signal for purchasing power and wage erosion.

4

I fed that into Grok and Grok responded

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5

yes, we are NOT at no inflation despite the POTUS proclamation

here is what AI said

“Since January 20, 2025, the U.S. Consumer Price Index (CPI) has shown a 3.0% year-over-year increase as of the July 2025 report, driven by monthly gains of 0.5% in January and 0.4% in February, followed by smaller monthly increases of 0.3% and 0.4% in March and April respectively, and a 0.2% rise in May and June. The year-over-year headline inflation rate was 2.7% in July 2025”

Allan

1 Like
6

Correct.
a one-month figure such as this one is always a throw-away . . . unless we have some specific reason to think it is a departure from the past.

As the head of the European Central Bank once said
“We are data dependent, not data POINT dependent.”