Wholesale prices fell from June to July. This was his first monthly decline in more than two years, and inflationary pressures in the US economy cooled last month.
The Producer Price Index, which measures inflation before it reaches consumers, fell 0.5 percent in July, according to a Labor Department report on Thursday. This is the first monthly decline since April 2020, down from his steep 1% increase from May to June.
Moderation in wholesale inflation suggests that consumers may find some relief fromrelentless inflationin the coming months. The wholesale report follows Wednesday's government data that showed consumer inflation remained unchanged from June to July.
But economists warn that it is too early to say that inflation is steadily declining.
"July's slowdown...is a move in the right direction," said Rubira Faroochi, chief US economist at High Frequency Economics. "However, producer costs continue to rise rapidly and are well above target."
Wholesale food prices increased by 1% from June to July, andfood prices are likely to continue rising in the coming months. Wholesale prices for eggs, beef and vegetables all jumped.
However, trucking freight rates have fallen by 0.3%, indicating supply chain disruptions are easing.
Inflation at the wholesale level jumped 9.8% year-on-year in July, suggesting that inflation will remain painful in the coming months. increase. This was down from June's surge of 11.3% year-on-year (close to a 40-year high) and the smallest annual gain in eight months.
Wholesale gas prices fell 16.7 percent from June to July, according to Thursday's report. This indicates that retail prices at pumps will continue to fall this month, and possibly through September. Consumers are already seeing steady price cuts: gas prices averaged below $4 a gallon on Thursday for the first time in five months.
moderate Strong inflation data and unexpectedly strong employment last month pushed the unemployment rate down to a half-century low of 3.5%, giving President Joe Biden a positive outlook. brought After months of soaring prices, economic news shattered his approval ratings. Republicans in Congress have made rising inflation a major target of attack in the upcoming midterm elections.
And the Federal Reserve has begun raising rates at the fastest rate since the early 1980s to keep inflation in check. the rest of the year. Short-term interest rates are now in the 2.25% to 2.5% range, the highest since 2018.
Chairman Jerome Powell said the Fed needs to see a series of lower inflation rates before considering a moratorium. its proportion increases. The Fed may announce at its next meeting in late September that he will raise rates by 3 percentage points for the third straight quarter, or implement his 0.5 percentage point rate hike more gradual.
Thursday's producer price data captures inflation early in production and may show where consumer prices are headed. It is also called the Personal Consumption Expenditure Price Index. It's also reflected in the Fed's favorite inflation indicator.