Wholesale prices unexpectedly fell in June as sliding energy costs helped brighten the inflation picture, the Bureau of Labor Statistics reported Wednesday.
The produce price index posted a seasonally adjusted 0.3% decline for the month, compared with the Dow Jones consensus estimate for the final demand cost measure to be unchanged. On an annual basis, the index indicated a 5.5% inflation rate. The May reading was revised sharply lower, from an initially reported increase of 1.1% to 0.6%.
Excluding food and energy, the core PPI rose 0.2%, against the outlook for a 0.3% increase. The core PPI less trade services rose 0.1% and was up 5.1% from a year ago.
As with consumer prices, the index benefited from easing energy costs, particularly as oil fell due to the brief pause in tensions between the U.S. and Iran. Goods prices posted a 1.4% monthly decline, the biggest drop since July 2022 as energy slumped 6.4% and final demand food prices were off 0.6%.
Within the goods category, gasoline tumbled 12%, accounting for about two-thirds of the monthly decrease.
People shop for groceries at a store in Arlington, Virginia, the United States, on June 10, 2026.
Li Rui | Xinhua News Agency | Getty Images
At the same time, services prices rose 0.2%, boosted by a 0.4% increase in trade services.
The release comes the day after the BLS reported that the consumer price index, a broad measure of inflation at the cash register, posted an unexpectedly sharp decline of 0.4% in June, bringing the annual inflation rate down to 3.5%. That was the biggest monthly drop since April 2020, just after the Covid pandemic declaration.
Core consumer inflation slipped to 2.6% after prices were unchanged for the month.
While the inflation measures are still well above the Federal Reserve’s 2% goal, they do represent progress in the central bank’s five-year battle to get back to target.
“The Fed’s war with inflation isn’t over by any means,” said Chris Rupkey, chief economist at Fwdbonds, “… but there is good news from the front and the odds of Fed rate hikes should continue to recede as inflation at the factory level is trending lower, and producers will not be passing on their higher costs to the consumer level as much as we previously thought.”
Stocks were higher Wednesday morning, though traders scaled back expectations for interest rate hikes, with September now a 50-50 bet, according to the CME Group’s FedWatch gauge of futures pricing.
The consumer and producer price indexes both feed heavily into the calculation of the Fed’s preferred inflation gauge. Policymakers most closely follow the personal consumption expenditures price index, due to be released later this month from the Commerce Department. For May, the PCE index indicated headline inflation of 4.1% and core at 3.4%, both likely to come down following this week’s releases.
Markets still expect the Fed to approve an interest rate hike this year, as soon as September. Fed Chairman Kevin Warsh on Tuesday told House lawmakers that the June decline in prices did not represent a “mission accomplished” moment for inflation.
