US factory gate prices see outright decline in July

Factory gate prices in the States undershot forecasts by a wide margin in July as food and energy prices registered significant drops.

The US producer price index slipped 0.4% month-on-month and was 0.2% lower versus the same month of 2015, according to the Bureau of Labor Statistics.

Economists had projected a rise of 0.1% month-on-month and 0.3% year-on-year.

Prices for goods decreased by 0.4% month-on-month and those for services by 0.3%.

Food price inflation cooled 1.0% over the month as energy prices fell 1.0%.

Core prices were flat when compared to the month before and up by 0.8% against the prior year month.

Market consensus had been for gains of 0.2% and 1.2%, respectively.

"Producer prices fell unexpectedly in July, with the decline broadly based across most goods and services components. [...] After firming for a few consecutive months, PPI emerged from deflation in June suggesting a gradual firming in domestic pipeline price pressures. However, the weakness in the July report brought PPI final demand back into deflation," said Blerina Uruci at Barclays Research.