Producer-price index fell 0.3% in June
Rising inflation first shows up in wholesale prices.
Wholesale prices fell in June for the first time in 10 months, largely due to lower gas prices, but it is unclear whether the recent slowdown in inflation will persist in light of renewed hostilities between the U.S. and Iran.
The producer-price index dropped 0.3% in June, the government said Wednesday, following a similar decline in the prices consumers paid.
The chief source of the decline in inflation in June was a big drop in energy prices after the U.S. and Iran agreed to peace talks last month. Wholesale gas prices sank 12%.
However, fighting resumed this week over control of the key Strait of Hormuz, pushing oil prices higher.
The good news is that the cost of oil is still far below a recent peak. Energy prices might not have a big effect on inflation, as they did in the spring.
The danger from the recent wave of inflation is not over, though. Wholesale prices have risen 5.5% past 12 months and show there's more inflation sloshing about in the guts of the U.S. economy.
Wholesale prices are where inflation shows up first, and these prices tend to hint at future changes in what consumers pay.
Key details: If not for the big decline in fossil-fuel prices, inflation would have risen slightly in June.
A separate price gauge known as the core rate, which strips out energy, inched up 0.1%. The increase was well below the 0.3% Wall Street forecast.
The 12-month increase in the core rate was unchanged at 5.1%.
Goods and services prices both rose mildly in June, giving no clear signals on the direction of inflation.
The cost of partly finished goods and raw materials, however, both fell in June, perhaps a sign that wholesale inflation might continue to ease. Both categories have seen declines in the past 12 months.
Big picture: Consumer and wholesale prices both eased in June as oil prices declined, but it remains to be seen if inflation slows enough in the months ahead to deter the Federal Reserve from raising interest rates.
With inflation running near a three-year high, new Fed Chair Kevin Warsh has promised to stamp it out. Raising interest rates is the central bank's chief tool to do that.
Fed officials might be willing to wait, however, to see if the Mideast conflict dies down and reduces the pressure on energy prices. The recent oil shock has been the biggest driver of the spike in inflation this year.
Looking ahead: "Energy saved the day in June, but that might become ancient history if the Strait of Hormuz doesn't open soon," said David Russell, global head of strategy at TradeStation.
Market reaction: The Dow Jones Industrial Average DJIA and S&P 500 SPX opened higher on Thursday.
-Jeffry Bartash
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(END) Dow Jones Newswires
July 15, 2026 09:35 ET (13:35 GMT)
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