US producer prices rose for a third straight month in July, suggesting the drag on inflation from weaker oil prices was easing.
The country’s Labor Department said its producer price index for final demand increased 0.2% last month after increasing 0.4% in June.
An increase of 0.4% in services prices, which offset a fall of 0.1% in the cost of goods, accounted for the increase in the PPI last month.
In the 12 months through July, the PPI fell 0.8% after declining 0.7% in June. It was the sixth straight 12-month decrease in the index.
Economists polled by Reuters had forecast the PPI edging up 0.1% last month and falling 0.9% from a year ago.
US stock index futures and prices for US Treasuries fell after the data. The dollar pared losses against a basket of currencies.
With the dollar remaining strong and oil prices falling again, inflation pressures are likely to remain benign. That and China's surprise devaluation of the yuan this week has some economists believing that the Federal Reserve will be hesitant to raise interest rates next month.
Inflation has been persistently running below the Fed's 2% target. A government report yesterday showed import prices fell 0.9% in July.
Economists at BNP Paribas estimate that a 10% drop in the yuan against the dollar could shave about one-tenth of a percentage point off US inflation over 12 months.
The dollar has gained 15.7% against the currencies of the United States' main trading partners since June 2014.
Last month, wholesale gasoline prices rose 1.5% after gaining 4.3% in June.
Food prices dipped 0.1% in July on a sharp drop in egg prices, which had surged in recent months. Food prices rose 0.6% in June. Wholesale chicken egg prices fell 24.2% in July after soaring a record 84.5% in June.
The volatile trade services component, which mostly reflects profit margins at retailers and wholesalers, rose 0.4% in July after increasing 0.2% in the prior month.
A key measure of underlying producer price pressures that excludes food, energy and trade services rose 0.2% last month after increasing 0.3% in June. The so-called core PPI was up 0.9% in the 12 months through July.