U.S. wholesale inflation eases in July as gas and food price pressures subside

The Labor Department said the producer price index, a measure of wholesale inflation, increased 4.7% in July compared with a year earlier, a slowdown from the 5.5% rise recorded in June. On a month-to-month basis, overall wholesale prices were flat between June and July after a 0.1% decline the previous month.

Excluding food and energy, core wholesale inflation fell to 4.2% in July from 4.7% in June, and core prices dropped 0.2% month-over-month, down from a 0.4% decline the month before. The moderation follows a recent consumer price index report that also showed a slight easing in inflation.

"The soft (producer prices) reading for July points to reduced inflationary pressure for businesses in coming months," said Ben Ayers, senior economist at Nationwide. "While the renewed rise in fuel costs is concerning, input costs beyond energy are cooling."

Gas prices, which had fallen early in July, rose again later in the month and into early August, a development that could affect the next month’s data. The latest wholesale figures give Federal Reserve policymakers additional flexibility as they consider whether to raise the benchmark interest rate at their September meeting.

Economists monitor wholesale price trends because they can signal future consumer inflation and feed into the Fed’s preferred price gauge, the personal consumption expenditures (PCE) index, scheduled for release in late August. Forecasts suggest the core PCE rate may hold steady around 3.3% for July, still above the Fed’s 2% target.

The labor market also showed signs of weakness, with the government reporting a net loss of jobs in July, which may further influence the central bank’s rate-setting decisions.