U.S. wholesale inflation slowed in July as gasoline and food costs eased, offering a potential sign that consumer price pressures could continue moderating even as household budgets remain strained.
By yourNEWS Media Newsroom
Wholesale inflation cooled in July as lower gasoline and food costs helped reduce price pressures before they reached consumers, according to new Labor Department data.
The producer price index rose 4.7% in July compared with a year earlier, slowing from a 5.5% annual increase in June.
On a month-to-month basis, wholesale prices were unchanged between June and July. That followed a 0.1% decline in the previous month.
The producer price index measures changes in the prices businesses receive for goods and services and is often watched as an early indicator of inflation that may later appear in consumer prices.
July’s moderation was aided in part by gasoline prices retreating from increases associated with the war involving Iran. Food and other costs also cooled during the month.
The latest wholesale figures followed the government’s consumer inflation report released Wednesday, which likewise showed a modest easing in price pressures during July.
Together, the reports suggest inflation could continue moving lower in the coming months if reduced input costs are eventually reflected in the prices paid by households.
The improvement, however, comes against a backdrop of continued financial pressure for consumers.
Consumer prices have increased faster than wages for four consecutive months, reducing purchasing power and putting additional strain on household finances.
That gap means that even as the pace of inflation moderates, many Americans are still paying more for everyday goods and services without seeing their earnings rise at the same rate.
There are also signs that the July improvement may not continue uninterrupted.
Gasoline prices moved higher again in late July and early August, creating the possibility that energy costs could put renewed upward pressure on inflation when the government releases its August data next month.
The July producer price report therefore presents a mixed picture.
Wholesale inflation has slowed considerably from June, with the annual rate falling from 5.5% to 4.7% and monthly prices showing no increase. But rising gasoline prices and the continued erosion of household purchasing power remain risks to a sustained improvement in the inflation outlook.
For consumers, the key question will be whether the recent cooling in wholesale prices filters through to retail prices in the months ahead or is offset by renewed increases in fuel and other essential costs.
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