[WASHINGTON] US producer prices were flat in August as the cost of energy products declined and trade services fell, but underlying producer inflation firmed. The Labor Department said on Thursday the unchanged reading in its producer price index for final demand followed a 0.4 per cent drop in July. In the 12 months through August, the PPI was unchanged after decreasing 0.2 per cent in July. Economists polled by Reuters had forecast the PPI nudging up 0.1 per cent last month and gaining 0.1 per cent from a year ago. Producer prices have been dampened by a strong dollar and cheaper oil. But some of the drag is easing with the dollar rally appearing to have peaked early this year and oil prices having pushed off multi-decade lows. Inflation has persistently undershot the Federal Reserve's 2 per cent target, also constrained by sluggish wage growth. Last month, trade services - which measure changes in margins received by wholesalers and retailers - fell 0.6 per cent after declining 1.3 per cent in July. Energy prices fell 0.8 per cent after dropping 1.0 per cent in July. Healthcare costs increased 0.4 per cent last month after rising 0.3 per cent in July. The cost of doctor visits, dental and hospital outpatient care also rose. Healthcare costs feed into the Fed's preferred inflation measure, the core personal consumption expenditures (PCE) index. A key gauge of underlying producer price pressures that excludes food, energy and trade services increased 0.3 per cent month after being unchanged in July. The so-called core PPI increased 1.2 per cent in the 12 months through August, the biggest gain since December 2014. It increased 0.8 per cent in June.

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