Quick Read – Producer prices dropped 0.4% in June, marking the largest monthly decline since the pandemic and signaling that Fed rate hikes are increasingly unlikely. – Year-over-year wholesale inflation slowed to 1.8% from 2.5%, as energy prices plunged 4.1% and food costs fell…
arly 1%. – Rebounding crude oil, with WTI near $80 and Brent near $85, threatens to reverse June’s inflation relief through rising transportation and manufacturing costs. – Inflation has dominated markets for the better part of four years, forcing investors to obsess over every government report for clues about the Federal Reserve’s next move. That obsession may finally be paying off
Just one day after consumer prices pointed to easing inflation pressures, a fresh report from the Bureau of Labor Statistics delivered even better news: Producer prices unexpectedly fell in June, suggesting businesses are seeing fewer cost pressures before those costs ever reach consumers. While one report won’t guarantee the Fed has finished tightening, it adds another piece of evidence that higher interest rates may have finally done their job. Wholesale Inflation Takes an Unexpected Turn BLS reported that the Producer Price Index (PPI), which measures prices businesses receive for their goods and services, fell 0.4% in June from May.
Economists surveyed by Reuters had expected a 0.2% increase, making the decline an unexpected surprise. Even more encouraging, producer prices were up just 1.8% year over year, slowing from 2.5% in May. The biggest contributor was energy.