The July Producer price index unexpectedly drops

The data: The producer price index, which gauges the prices received for final demand products, fell 0.5% from June, the first month-over-month decrease since April 2020, the month after Covid-19 was declared a pandemic. Economists surveyed by Dow Jones had been expecting an increase of 0.2%.

Why it matters: “Cooling prices paid by producers portend a further cooling for consumer prices, as producer prices are further up the inflation pipelines,” said Jeffrey Roach, chief economist at LPL Financial.

“We expect producer prices to ease as supply chains improve. It could take up to three months for improved supply chains to affect prices for the end consumer.”