US producer prices unchanged in July

WASHINGTON, Aug 13 (Reuters) - U.S. ‌producer prices ​were ​unchanged in July as goods prices declined, though a rise in the cost of services suggested ‌inflation could remain elevated.

The flat reading in the ⁠Producer Price Index for final demand last month followed a revised ‌0.1% drop in June, the ‌Labor Department's Bureau of Labor Statistics said on Thursday.

Economists polled by Reuters had forecast the PPI rebounding 0.2% ​following a previously reported 0.3% decline in June. The cost of services increased 0.2% while producer goods prices ⁠fell 0.7%. Most of the data are collected early in the month, meaning ​that sharp oil price increases toward the end of July were probably not reflected in the ​PPI.

In the 12 months through July, ‌the PPI increased 4.7% after advancing 5.5% in June. The Federal Reserve tracks the Personal ⁠Consumption Expenditures price indexes for its 2% inflation target. Following unexpected job losses in July and mild consumer inflation readings, the ⁠PPI report added to the case for the U.S. central bank ​to keep interest rates unchanged at the September 15-16 policy meeting.

The Fed last month left its benchmark overnight interest rate in the ‌3.50%-3.75% range. Prior to the PPI report, economists estimated that the PCE price index excluding ‌the volatile food and energy components increased 0.2% in July ⁠after gaining 0.1% in ‌June. The so-called core ​PCE inflation was forecast advancing 3.3% year-on-year, matching June's rise.

(Reporting by Lucia Mutikani; Editing by Chizu ‌Nomiyama)

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