United States wholesale prices unexpectedly declined in June as a sharp drop in gasoline prices reinforced signs that inflation is cooling, providing further evidence that price pressures eased during the month.
The Producer Price Index (PPI), which measures prices received by producers for goods and services, fell a seasonally adjusted 0.3% in June, according to the Bureau of Labor Statistics. Economists had expected the index to be unchanged.
On an annual basis, producer prices increased 5.5%, well under market expectations of a 6.2% increase.
The previous month's reading was revised sharply lower, with May's PPI now showing a 0.6% increase instead of the initially reported 1.1% rise.
Core producer prices, which exclude the volatile food and energy components, rose 0.2% during the month, slightly below expectations for a 0.3% increase.
A narrower measure excluding food, energy and trade services increased just 0.1% and was 5.1% higher than a year earlier.
The report follows Tuesday's softer-than-expected Consumer Price Index (CPI) release, marking a second consecutive day of encouraging inflation data.
Much of the improvement reflected lower energy prices, particularly after oil prices retreated during a brief easing of tensions between the United States and Iran earlier in the month.
Goods prices fell 1.4% in June, the largest monthly decline since July 2022, as energy prices dropped 6.4%. Food prices also edged 0.6% lower.
Within the goods category, gasoline prices plunged 12%, accounting for roughly two-thirds of the overall monthly decline in wholesale prices.
Meanwhile, services prices rose 0.2%, supported by a 0.4% increase in trade services.
While inflation remains above the Federal Reserve's 2% target, the latest data suggest further progress in the central bank's prolonged effort to bring price growth under control.
Both the CPI and PPI feed into the Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's preferred measure of inflation.
The next PCE report is due later this month. In May, headline PCE inflation stood at 4.1%, while the core measure was 3.4%, with both expected to moderate following this week's softer inflation readings.
Despite the recent improvement, financial markets continue to expect the Federal Reserve to raise interest rates once more this year, with September viewed as the most likely timing.
Federal Reserve Chair Kevin Warsh cautioned lawmakers on Tuesday that June's softer inflation figures did not represent a "mission accomplished" moment in the fight against inflation.
