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Inflation: Producer prices rise more than expected in August

Yahoo Finance’s Ines Ferre joins the Live show to break down August producer price index data and higher prices for home furnishings.

Video Transcript

[AUDIO LOGO]

[MUSIC PLAYING]

BRAD SMITH: Let's get on over though to Yahoo Finance's Ines Ferré who's standing by at the Y Fi Interactive, Ines?

INES FERRÉ: Yeah, Brad, and as you mentioned, markets slightly higher but let's take a look at the US dollar index. Yesterday that moved up after that CPI print. Well, today it's retreating a little bit, so this is supporting equities and commodities slightly. We are looking at the sector action right now and we're watching energy, which is really the outperformer but I'm just going to show you a two-day chart so you can see some of the big losses that we saw in communication services, technology, materials, over the last two days, consumer discretionary as well after that hot CPI print yesterday.

Now today we did get the PPI print, and that's the Producer Price Index. And on a month over month basis that fell by 0.1%, we want to show you the screen right there. And this came in line with expectations but the core PPI, that would be excluding energy and food, that came in slightly higher than expected. What this is showing is similar to what we saw with the CPI yesterday because the CPI yesterday, that core print came in hotter than expected.

And a couple of reasons for this. One is because of rent, and the other also I spoke to an inflation expert who told me that he was surprised to see household furnishings and supplies going up on a month over month basis, saying that look, given what retailers have told us over the last several months, that they have a lot of inventory, that people are spending less on discretionary items, that they're only spending on food and energy, that he was surprised not to see these prices come down more because the retailers had been saying that they will be slashing prices.

Two reasons maybe because of this, and I have a Yahoo Finance article coming out about this today, and one of them according to Omair Sharif of Inflation Insights, may be because the BLS is not measuring this data properly but he doesn't really think that may be it. He thinks it may be this other reason, which would be that retailers perhaps are not lowering their prices as much as that they said they would. Maybe they have their inventory in warehouses, it's not costing them that much but this is certainly a phenomenon that we're going to keep watching over the next several months because he said that this really surprised forecasters. They have been expecting this to come-- these prices in household furnishings and supplies to come down more than they have.

JULIE HYMAN: Of all these things, I keep complaining about airline prices not coming down. This is another one because I'm doing a home renovation, this is-- it's painful stuff. I got to tell you, Ines. Thank you for tracking it for us. Appreciate it.