US producer prices unexpectedly fell in June, posting their biggest decline in 14 months amid a pullback in the cost of energy products, further evidence that inflation was subsiding before the recent escalation in the Middle East conflict.
The report from the Labour Department yesterday also showed a sharp downward revision to the Producer Price Index data for May, and followed news on Tuesday of a larger-than-expected drop in the monthly Consumer Price Index last month.
The data, together with a slowdown in job growth in June, effectively ruled out an interest rate increase from the Federal Reserve this month. The reports have, however, been overtaken by the renewed hostilities between the United States and Iran following last week’s collapse of a fragile ceasefire. Oil prices have climbed to a one-month high after Washington reimposed a naval blockade of Iran.
The PPI report also showed further price gains related to the artificial intelligence build-out, a concern for officials at the US central bank. These factors keep a rate hike this year on the table, economists said.
The Producer Price Index for final demand dropped 0.3 per cent last month, the biggest decline since April 2025, after a downwardly revised 0.6pc increase in May, the Labour Department’s Bureau of Labour Statistics said. Economists polled by Reuters had forecast the PPI unchanged after a previously reported 1.1pc gain in May.
The BLS said PPI data from February through May had been revised to reflect the “availability of late reports and corrections by respondents.”
In the 12 months through June, the PPI increased 5.5pc after rising 6.0pc in May. A narrower measure of the PPI, which excludes food, energy and trade, edged up 0.1pc over the month and advanced 5.1pc on a year-on-year basis.
A 1.4pc decline in goods prices, the largest since July 2022, accounted for the decrease in the PPI over the month. Goods prices increased 2.3pc in May. They were in June weighed down by a 6.4pc drop in the cost of energy products, which followed an 8.4pc jump in May. Petrol prices tumbled 12pc, accounting for nearly two-thirds of the drop in goods prices.
The cost of natural gas decreased 6.4pc, but residential electricity prices rose 0.7pc. There were also decreases in the prices of crude petroleum as well as thermoplastic resins and materials. The truce between the US and Iran was shattered after commercial tankers came under fire in the Strait of Hormuz, a vital route for global oil supplies, that has become one of the main battlegrounds of the conflict.
Wholesale food prices fell 0.6pc, with the cost of fresh fruits and melons declining 2.2pc. Fresh and dried vegetable prices dropped 6.0pc, while the cost of grains plunged 12.0pc.
&uuid=(email))