US inflation watch: Producer prices dip 0.1% in August; weaker-than-expected data hints at tariff impact

US producer prices unexpectedly fell 0.1% in August from July, the Labor Department reported Wednesday, after a 0.7% advance the previous month.

The producer price index — a measure of inflation in the supply chain before it reaches consumers — showed wholesale services prices dropped 0.2% as retailers and wholesalers absorbed costs from President Donald Trump’s import tariffs, AP reported.

On a yearly basis, producer prices rose 2.6%. Excluding volatile food and energy categories, core producer prices also fell 0.1% from July and climbed 2.8% from a year earlier. Both readings came in lower than economists had forecast.

The report came a day before the release of consumer price index data, which is expected to show a 0.3% monthly rise in August and an annual increase of 2.9%, up from 2.7% in July.

Producer prices are closely watched as an early signal of consumer inflation trends. They also feed into the Federal Reserve’s preferred gauge, the personal consumption expenditures (PCE) price index.

The fall in wholesale prices adds to expectations that the Fed may cut its benchmark interest rate next week for the first time this year. Trump has been pressuring the central bank to ease policy, while recent revisions showed employers added 911,000 fewer jobs in the year ending March than earlier reported.