US producer prices dropped for a second straight month in August since the cost of gasoline fell further, resulting in the least annual increase in a year. This could ease fears of inflation becoming entrenched.

On Wednesday, the Labor Department’s report also revealed underlying producer inflation rose moderately last month, implying snarled supply chains were loosening up.

The producer price index (PPI) for final demand dropped 0.1 per cent last month after falling 0.4 per cent in July. A 1.2 per cent decline in goods prices accounted for the PPI drop. Notably, the decline in goods prices was largely driven by a 12.7 per cent gasoline cost collapse. However, food prices were unchanged.

The cost of services grew 0.4 per cent after advancing 0.2 per cent in July. Sixty per cent of last month’s advance in services was attributed to a 0.8 per cent rise in margins received by retailers and wholesalers.

Prices for portfolio management increased. However, there were declines in the costs of truck transportation of freight and guestroom rental, as well as food and alcohol retailing.

In the twelve months through August, the PPI rose 8.7 per cent. That was the weakest year-on-year reading since August 2021 and followed a 9.8 per cent increase in July.