PPI

Producer prices climbed by 0.2% in July, matching economists' expectations, and following a 0.5% drop in June.  The gain was the first increase in wholesale costs since March.  Prices excluding food and fuel increased 0.3%, beating expectations of a 0.1% increase.  The jump in the core index was the ninth monthly increase in a row.  Producer prices are up 4.2% from a year ago and core prices have increased 1.5% over the same period.  Higher food (+0.7%) costs helped to push the headline number upwards.

Summary:  Wholesale prices climbed in July for the first time in four months as the cost of food increased, and core prices also saw a modest increase.  However, with the U.S. economy facing low inflation pressures and the European debt crisis hindering global economic growth, the Fed is likely to keep target interest rates at historically low levels into 2011.

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