U.S. PPI falls 0.1% in August, boosting rate-cut bets

U.S. producer prices unexpectedly fell in August, signaling cooler inflation pressures in the supply chain and strengthening expectations that the Federal Reserve may cut interest rates soon, the Labor Department reported Wednesday. The producer price index declined 0.1 percent from July and was up 2.6 percent from a year earlier, while the core measure that excludes food and energy also slipped 0.1 percent month to month and rose 2.8 percent annually, the Bureau of Labor Statistics said.

The drop followed a sizable advance in July and came in below economists' forecasts. Wholesale services prices fell 0.2 percent on the month, a decline the BLS attributed largely to narrower profit margins at wholesalers and retailers. Goods prices excluding food and energy rose 0.3 percent. The agency revised July's reading downward, reinforcing the notion that upward pressure on wholesale prices eased in August.

Analysts said the mixed components in the report underscore uncertainty about how recent trade measures will affect inflation. The BLS noted a steep drop in margins for machinery and vehicle wholesaling, which accounted for much of the decline in services margins, and one analysis...