It isn’t much – barely a blip on the economic radar, but wholesale prices dropped last month for the first time in two years, according to statistics released by the Bureau of Labor Statistics.
The producer price index fell 0.5% from June, the first month-over-month decrease since April 2020, the month after Covid-19 was declared a pandemic. Economists surveyed by Dow Jones had been expecting an increase of 0.2%, CNBC reported Thursday.
On an annual basis, the index rose 9.8%, the lowest rate since October 2021. That compares with an 11.3% increase in June and the record 11.7% gain in March, the network said.
Most of the decline came from energy, which dropped 9% at the wholesale level and accounted for 80% of the total decline in goods prices, which fell 1.8%. The index for services rose 0.1%.
Stripping out food, energy and trade services, PPI increased 0.2% in July, which was less than the expected 0.4% gain, CNBC reported.
“Cooling prices paid by producers portend a further cooling for consumer prices, as producer prices are further up the inflation pipelines,” Jeffrey Roach, chief economist at LPL Financial, told CNBC. “We expect producer prices to ease as supply chains improve. It could take up to three months for improved supply chains to affect prices for the end consumer.”
Federal Reserve officials are watching the inflation data closely for clues about where the economy stands after more than a year of wrestling with high inflation.
The Fed has issued rate increases that have come in successive 0.75 percentage point increments in June and July.
The Labor Department also reported Thursday that weekly jobless claims totaled 262,000 for the week ended Aug. 6, an increase of 14,000 from the previous week. Those claims have been elevated in recent weeks in a sign that a historically tight labor market is shifting. Continuing claims rose 8,000 to 1.43 million.