Wholesale price increases in the U.S. picked up slightly in July, according to the Associated Press, yet reports still suggested that inflationary pressures have eased this year since reaching alarming heights in 2022.
The Labor Department reported today that its producer price index — which measures inflation before it hits consumers— rose 0.8% last month from July 2022. The latest figure followed a 0.2% year-over-year increase in June, which had been the smallest annual rise since August 2020. On a month-to-month basis, producer prices rose 0.3% from June to July, with no change between May and June.
The producer price figures the Labor Department issued this morning reflect prices charged by manufacturers, farmers, and wholesalers. The figures can provide an early sign of how fast consumer inflation will rise in the coming months. Since peaking at 11.7% in March 2022, wholesale inflation has steadily tumbled in the face of the Federal Reserve’s 11 interest rate hikes.
By all measures, inflation has cooled over the past year, moving closer to the Fed’s 2% target level but remaining persistently above it. The moderating pace of price increases, combined with a resilient job market, has raised hopes that the Fed may achieve a difficult “soft landing.”
Many economists and market analysts think the Fed’s most recent rate hike in July could be its last. Before the Fed next meets Sept. 19–20 to decide whether to continue raising rates, it will review several additional economic reports. These include another monthly report on consumer prices; the latest reading of the Fed’s favored inflation gauge; and the August jobs report.
