Wholesale prices fell in June for the first time in months, offering fresh evidence that inflation pressures may be easing as energy costs retreated, according to data released Wednesday by the Bureau of Labor Statistics.
The producer price index dropped 0.3% on a seasonally adjusted basis, defying expectations from economists who had forecast no change for the month. The decline marked a sharp reversal from May, which was revised down to show a 0.6% increase rather than the initially reported 1.1% gain.
On an annual basis, the PPI indicated wholesale inflation running at 5.5%, still well above the Federal Reserve’s target but showing signs of moderation.
Energy Drives the Decline
The monthly drop was primarily driven by energy prices, which plunged 6.4% as oil markets reacted to a brief pause in tensions between the United States and Iran. Within the energy category, gasoline prices tumbled 12%, accounting for roughly two-thirds of the overall monthly decrease in wholesale prices.
Goods prices overall fell 1.4%, representing the steepest monthly decline since July 2022. Final demand food prices also edged down 0.6%.
Core wholesale inflation, which excludes volatile food and energy components, rose a more modest 0.2% for the month, below the 0.3% increase analysts had anticipated. The core PPI less trade services climbed 0.1% and stood 5.1% higher than a year earlier.
Services Remain Sticky
While goods prices fell sharply, services prices continued to advance, rising 0.2% for the month. Trade services led the increase with a 0.4% gain, underscoring the persistent inflation pressures in the service sector even as commodity costs ease.
The wholesale inflation report arrived one day after the Bureau of Labor Statistics showed consumer prices fell 0.4% in June, the sharpest monthly drop since April 2020. That decline brought the annual consumer inflation rate down to 3.5%, while core consumer inflation slipped to 2.6%.
Fed Still Cautious
Both the consumer and producer price indexes feed into the personal consumption expenditures price index, the Federal Reserve’s preferred inflation gauge. The Commerce Department is scheduled to release the June PCE data later this month. In May, the PCE showed headline inflation at 4.1% and core at 3.4%, figures likely to decline following this week’s softer price readings.
Despite the encouraging inflation data, Federal Reserve Chairman Kevin Warsh told House lawmakers Tuesday that the June price decline did not represent a “mission accomplished” moment. Markets continued Wednesday to price in a roughly even chance of an interest rate hike in September, according to CME Group’s FedWatch tool.
“The Fed’s war with inflation isn’t over by any means,” said Chris Rupkey, chief economist at Fwdbonds. “But there is good news from the front and the odds of Fed rate hikes should continue to recede as inflation at the factory level is trending lower, and producers will not be passing on their higher costs to the consumer level as much as we previously thought.”
Stock markets rose Wednesday morning as traders digested the inflation data and adjusted expectations for future monetary policy.
Source: www.cnbc.com — https://www.cnbc.com/2026/07/15/wholesale-inflation-june-2026-.html
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