- Millan Mulraine, deputy chief economist at TD Securities
US producer prices remained flat last month, suggesting benign inflation pressures that could impact the Fed's decision whether to hike rates this week. The unchanged reading of PPI in August followed the 0.2% increase in July, according to the Labor Department. Excluding the volatile food and energy components, core prices climbed 0.3% in August, the same pace as in the previous two months. However, much of that increase was due to an increase in the volatile trade-services category. In the 12 months through August, producer prices dropped 0.8% following a similar fall in July. It was the seventh consecutive 12-month decrease in the index.
A separate report showed US consumer sentiment dropped to the lowest level in a year in September, as it was possibly undermined by recent stock market volatility amid worries over China's economic slowdown. According to the University of Michigan, US consumer sentiment index decreased to 85.7 early this month, hitting the lowest level since September last year, from a reading of 91.9 in August. The survey's measure of consumer expectations also declined to a one-year low, as households expected slower growth in overseas economies to hit the US economy. Moreover, consumers' expectations for current and future personal finances also took a knock.
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