Prices at the wholesale level fell from June to July, the first month-to-month drop in more than two years and a sign that some of the U.S. economy’s inflationary pressures cooled last month.
Thursday’s report from the Labor Department showed that the producer price index — which measures inflation before it reaches consumers — declined 0.5% in July. It was the first monthly drop since April 2020 and was down from a sharp 1% increase from May to June.
Yet economists caution that it’s still too early to say that inflation is headed steadily lower. “The July deceleration … is a move in the right direction,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics. “But producer costs continue to rise at a rapid pace, well above target.”
Wholesale food prices rose 1% from June to July, a sign that grocery prices will likely keep rising in the coming months. The wholesale costs of eggs, beef and vegetables all jumped.
Thursday’s report showed that wholesale gas prices tumbled 16.7% from June to July, a sign that retail prices at the pump will continue to decline this month and likely into September. Consumers are already seeing steady reductions: Gas prices fell below $4 a gallon, on average, on Thursday for the first time in five months.