Current:Home > MarketsUS wholesale inflation cooled in July in sign that price pressures are continuing to ease -Ascend Finance Compass
US wholesale inflation cooled in July in sign that price pressures are continuing to ease
View
Date:2025-04-13 07:28:55
WASHINGTON (AP) — Wholesale price increases in the United States eased in July, suggesting that inflation pressures are further cooling as the Federal Reserve moves closer to cutting interest rates, likely beginning next month.
The Labor Department reported Tuesday that its producer price index — which tracks inflation before it reaches consumers — rose 0.1% from June to July. That was down from a 0.2% rise a month earlier. And compared with a year earlier, prices were up 2.2% in July. That was the smallest such rise since March and was down from a 2.7% year-over-year increase in June.
The July wholesale figures reflect a broad and steady slowdown in price increases, which peaked at a four-decade high in mid-2022 but are now moving toward the Fed’s 2% inflation target. On Wednesday, the Labor Department will release the most well-known inflation measure, the consumer price index.
Tuesday’s report showed that prices in the nation’s vast service sector fell 0.2% last month, the biggest drop since March 2023. Goods prices rose 0.6%, largely because gasoline prices jumped 2.8% from June to July.
Excluding food and energy prices, which tend to fluctuate sharply from month to month, so-called core wholesale prices were unchanged from June and were up 2.4% from July 2023. The increases were milder than forecasters had expected.
The producer price index can provide an early sign of where consumer inflation is headed. Economists also watch it because some of its components, notably healthcare and financial services, flow into the Fed’s preferred inflation gauge — the personal consumption expenditures, or PCE, index.
Paul Ashworth, chief North America economist at Capital Economics, said that the prices that feed into PCE were overall “very encouraging.” He noted, in particular, mild increases in wholesale prices at doctors’ offices and hospitals. As a result, Ashworth scaled back his forecast for core PCE inflation in July to 1.4% from 1.8%.
Forecasters have estimated that Wednesday’s CPI report will show that consumer prices rose 0.2% from June to July, after falling 0.1% the previous month, and 3% from July 2023, according to a survey by the data firm FactSet.
As Americans prepare to vote in the November presidential election, many still remain unhappy with consumer prices, which are nearly 19% higher than were before the inflationary surge began in the spring of 2021. Many have assigned blame to President Joe Biden, though it’s unclear whether they will hold Vice President Kamala Harris responsible as she seeks the presidency.
In its fight against high inflation, the Fed raised its benchmark interest rate 11 times in 2022 and 2023, taking it to a 23-year high. From 9.1% in June 2022, year-over-year consumer price inflation has eased to 3%.
The U.S. jobs report for July, which was much weaker than expected, reinforced the widespread expectation that the Fed’s policymakers will begin cutting rates when they meet in mid-September to try to support the economy. The jobs report showed that the unemployment rate rose for a fourth straight month to 4.3%, still healthy by historical standards but the highest level since October 2021.
Over time, a succession of rate cuts by the Fed would likely lead to lower borrowing costs across the economy — for mortgages, auto loans and credit cards as well as business borrowing and could also boost stock prices.
.
veryGood! (977)
Related
- Most popular books of the week: See what topped USA TODAY's bestselling books list
- Warming Trends: Indoor Air Safer From Wildfire Smoke, a Fish Darts off the Endangered List and Dragonflies Showing the Heat in the UK
- 14 Gifts For the Never Have I Ever Fan In Your Life
- Latest on Ukraine: EU just banned Russian diesel and other oil products (Feb. 6)
- A Mississippi company is sentenced for mislabeling cheap seafood as premium local fish
- Maryland Thought Deregulating Utilities Would Lower Rates. It’s Cost the State’s Residents Hundreds of Millions of Dollars.
- The tide appears to be turning for Facebook's Meta, even with falling revenue
- Could Migration Help Ease The World's Population Challenges?
- The Daily Money: Spending more on holiday travel?
- Bear attacks and severely injures sheepherder in Colorado
Ranking
- See you latte: Starbucks plans to cut 30% of its menu
- Warming Trends: Tuna for Vegans, Battery Technology and Climate Drives a Tree-Killer to Higher Climes
- A century of fire suppression is worsening wildfires and hurting forests
- Ginny & Georgia's Brianne Howey Gives Birth, Welcomes First Baby With Husband Matt Ziering
- IRS recovers $4.7 billion in back taxes and braces for cuts with Trump and GOP in power
- Inside Clean Energy: The Coal-Country Utility that Wants to Cut Coal
- Save $155 on a NuFACE Body Toning Device That Smooths Away Cellulite and Firms Skin in 5 Minutes
- We Need a Little More Conversation About Cailee Spaeny and Jacob Elordi in Priscilla First Trailer
Recommendation
Pressure on a veteran and senator shows what’s next for those who oppose Trump
In the Amazon, the World’s Largest Reservoir of Biodiversity, Two-Thirds of Species Have Lost Habitat to Fire and Deforestation
Peter Thomas Roth 50% Off Deal: Clear Up Acne and Reduce Fine Lines With Complexion Correction Pads
Markets are surging as fears about the economy fade. Why the optimists could be wrong
Costco membership growth 'robust,' even amid fee increase: What to know about earnings release
Save $155 on a NuFACE Body Toning Device That Smooths Away Cellulite and Firms Skin in 5 Minutes
Biden’s Pause of New Federal Oil and Gas Leases May Not Reduce Production, but It Signals a Reckoning With Fossil Fuels
15 Products to Keep Your Pets Safe & Cool This Summer