Wholesale prices unexpectedly fell in June as sliding energy costs brightened the inflation picture, the Bureau of Labor Statistics said Wednesday.
The agricultural commodity price index fell a seasonally adjusted 0.3% in the month, compared with consensus expectations that the Dow Jones final demand cost index would remain unchanged. On an annual basis, the index showed an inflation rate of 5.5%. May’s statistics have been significantly revised downward from the originally announced 1.1% increase to 0.6% increase.
Core PPI, which excludes food and energy, rose 0.2% against expectations for a 0.3% rise. Core PPI excluding trade services rose 0.1%, up 5.1% year-on-year.
Like consumer prices, the index benefited from easing energy costs, particularly due to lower oil prices due to the pause in tensions between the US and Iran. Commodity prices fell 1.4% month-on-month, the biggest decline since July 2022, as energy fell 6.4% and final demand food prices fell 0.6%.
Within product categories, gasoline fell 12%, accounting for about two-thirds of the monthly decline.
People shop for groceries at a store in Arlington, Virginia, USA on June 10, 2026.
Li Rui | Xinhua News Agency | Getty Images
At the same time, services prices rose 0.2%, driven by a 0.4% rise in traded services.
The announcement came a day after the BLS reported that the Consumer Price Index, a broad measure of inflation at the register, recorded an unexpectedly steep 0.4% decline in June, bringing the annual inflation rate to 3.5%. This was the largest monthly decline since April 2020, immediately after the declaration of the new coronavirus pandemic.
Although prices were flat for the month, core consumer inflation fell to 2.6%.
Inflation control remains well above the Federal Reserve’s 2% target, but represents progress in the central bank’s five-year fight to get back on target.
“The Fed’s fight against inflation is by no means over,” said Chris Rupkey, chief economist at Fwdbonds. “…However, there is some good news from the front, with factory-level inflation trending lower and producers not passing on higher costs to the consumer level as much as previously thought, which should continue to reduce the likelihood of Fed rate hikes.”
Both the Consumer Price Index and the Producer Price Index are heavily factored into the calculation of the Fed’s preferred inflation measure. Policymakers are most closely watching the Consumer Expenditure Price Index, which the Commerce Department is expected to release later this month. The PCE index for May showed headline inflation at 4.1% and core inflation at 3.4%, both of which are likely to decline following this week’s announcement.
Markets still expect the Fed to approve a rate hike by the end of the year as early as September. Federal Reserve Chairman Kevin Warsh told House members on Tuesday that the June price drop was not a “mission accomplished” moment for inflation.
