Unexpected Decline in US August PPI Strengthens Case for Fed Rate Cut

According to Jin10, the US Producer Price Index unexpectedly declined in August, marking the first drop in four months and further strengthening the case for a Fed rate cut. The report released by the US Bureau of Labor Statistics on Wednesday showed a 0.1% month-on-month decrease in the Producer Price Index (PPI), with July data being revised downward. On a year-on-year basis, PPI rose by 2.6%. The report indicated that despite Trump's tariff policies raising business costs, companies avoided significant price hikes last month. While this decline followed a sharp increase in July, many businesses are concerned that substantial price hikes could deter customers amid ongoing economic uncertainty affecting consumer decisions. Excluding food and energy, commodity prices rose by 0.3%; service costs decreased by 0.2%. In the service sector, wholesale and retail profit margins fell by 1.7%, marking the largest drop in over a year. Profit margins have fluctuated significantly month-to-month this year, highlighting the uncertainty of trade policy's impact on prices and demand.

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