The surprising report offers a hopeful outlook for future consumer prices

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The Producer Price Index (PPI) for final demand was flat in June, following a 0.3% rise in May and a 0.3% drop in April.
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A 0.3% increase in goods prices offset a 0.1% decrease in services prices for the month.
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The core PPI (excluding food, energy, and trade services) remained unchanged in June but rose 2.5% year-over-year.
Tuesdays release of the Consumer Price Index showed a one-month 0.3% increase in the prices consumers paid in June. But Wednesdays release of the Producer Price Index was something of a surprise, showing inflation largely disappeared at the wholesale level last month.
Thats significant for consumers because it suggests there is little pressure to push consumer prices up in the near future, despite concerns about tariffs.
The U.S. Bureau of Labor Statistics reported today that wholesale inflation, as measured by the Producer Price Index (PPI) for final demand, was unchanged in June on a seasonally adjusted basis. The reading follows a 0.3% increase in May and a 0.3% decline in April, pointing to a cooling yet uneven inflationary trend in the producer market.
Over the past 12 months, the PPI rose 2.3%, a moderate increase that may offer the Federal Reserve some reassurance as it gauges future interest rate policy.
Goods offset weakness in services
The flat monthly PPI reading in June masks underlying movement in its two primary components: goods and services. Prices for final demand goods climbed 0.3% in June, the sharpest gain since February, led by a 0.3% rise in core goods, excluding food and energy. Energy and food prices also ticked upward by 0.6% and 0.2%, respectively.
Some price increases included:
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Communication and related equipment: up 0.8%
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Gasoline and electric power: higher
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Poultry and meat products: slightly higher
However, some categories saw steep declines. The price of eggs plunged by 21.8%, and materials such as natural gas liquids and thermoplastic resins also dropped.
On the services side, the index declined by 0.1%, a reversal from Mays 0.4% gain. The decline was primarily due to:
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A 4.1% decrease in traveler accommodation services
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Lower prices in automobile retailing, deposit services, airfare, and food and alcohol wholesaling
Economic outlook
The PPI report adds to a growing body of evidence that inflationary pressures at the wholesale level are stabilizing. With services pricing showing some signs of softness and goods prices rebounding modestly, analysts say the Federal Reserve is likely to maintain a cautious stance in its policy decisions.
While data in the PPI are encouraging, its retail prices that will affect consumers. Economists will now turn their attention to the CPI and other macroeconomic data for further clues on the direction of inflation and interest rates in the second half of the year.
Posted: 2025-07-16 14:37:43