Wholesale prices rise; food, energy decline

WASHINGTON — U.S. wholesale prices rose 0.3% in August, just half the July gain, as food and energy prices declined.

The Labor Department said Thursday that the August advance in the producer price index — which measures inflation before it reaches consumers — followed a 0.6% surge in July, which was the biggest monthly gain since October 2018.

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Helping to moderate wholesale prices in August was a 0.4% drop in food costs, the third straight decline after a big jump in May caused by supply bottlenecks related to coronavirus cases at meat packing plants. Energy costs edged down 0.1% in August after sizable gains in the previous three months.

The moderation in wholesale prices in August was an indication that inflation is remaining at low levels which will allow the Federal Reserve to keep its benchmark policy rate low for the foreseeable future in an effort to give a boost to an economy hit hard by the coronavirus pandemic.

Over the past 12 months, wholesale prices are down 0.2% while core prices, which exclude volatile food and energy costs, are up a modest 0.6%.

Average long-term mortgage rates fall

WASHINGTON — U.S. average rates on long-term mortgages fell this week amid signs that the halting economic recovery slowed over the summer. The key 30-year mortgage rate again marked an all-time low.

Mortgage buyer Freddie Mac reported Thursday that the average rate on the 30-year home loan declined to 2.86% from 2.93% last week. By contrast, the rate averaged 3.56% a year ago.

The average rate on the 15-year fixed-rate mortgage slipped to 2.37% from 2.42% last week.

Housing demand continues as one of few bright spots in the pandemic-hobbled economy. Spurred by historically low rates, applications for mortgage loans are up 25% from a year ago, according to Freddie Mac. It said the momentum will be difficult to sustain going into the fall because of the lack of available homes for sale.

EU probes Facebook’s data transfers to U.S.

LONDON — Facebook may be forced to stop sending data about its European users to the U.S., in the first major fallout from a recent court ruling that found some trans-Atlantic data transfers don’t protect users from American government snooping.

The social network said Wednesday that Ireland’s Data Protection Commission has started an inquiry into how Facebook shifts data from the European Union to the United States.

The news was first reported by the Wall Street Journal, which said Ireland’s data commission gave Facebook until mid-September to respond to a preliminary order to suspend the transfers.

The result could be that the U.S. tech giant, which has data centers around the world, is forced to undertake a costly and complex revamp of its operations to ensure that European user data is kept out of the U.S. It’s unclear, however, what impact — if any — there would be on Facebook users.

EU plans to use all of its stimulus money

FRANKFURT, Germany — European Central Bank head Christine Lagarde said the bank would “likely” use all of the $1.6 trillion in planned stimulus to support the economy through the pandemic, which has caused a massive recession and is seeing a new rise in contagions.

After the ECB left its key rates and stimulus settings unchanged on Thursday, Lagarde said that strong central bank support was still necessary given high uncertainty about the recovery from the pandemic lockdowns. She repeated the bank’s promise to keep the central bank’s pandemic emergency bond-buying program running through mid-2021 — and in any case until the coronavirus crisis phase is over.

The economy of the 19 euro currency countries plunged 11.8% in the April-June period from the previous quarter. Activity is picking up quickly but isn’t expected to regain pre-virus levels before 2022.

The ECB is also making 20 billion euros in monthly bond purchases from a stimulus effort launched before the outbreak.

China reports rise in car sales

BEIJING — China’s car sales rose 6% in August over a year earlier as the industry’s biggest market recovered from the coronavirus pandemic, but purchases for the year to date were off more than 15%, an industry group reported Thursday.

Sales of sedans, SUVs and minivans rose to 1.7 million, according to the China Association of Automobile Manufacturers.

Total vehicle sales, including trucks and buses, rose 11.6% to 2.2 million.

Auto sales for the first eight months of the year were down 15.4% at 11.3 million, an improvement from the first half’s 22.4% contraction.

Total vehicle sales were down 9.7% at 14.6 million.

Auto demand already was suffering before China shut down factories and dealerships in February to fight the coronavirus. Consumers are uneasy about a slowing economy and a tariff war with Washington.

Last year’s sales fell 9.6%, the second straight annual decline.

The Associated Press