Wholesale price inflation slows last month as gas, food costs fall
[August 14, 2026] By
CHRISTOPHER RUGABER
WASHINGTON (AP) — Wholesale inflation dropped last month as gas prices
reversed some of their Iran war spike and other costs also cooled, a
sign that consumer inflation could grind lower in the months ahead.
The Labor Department’s producer price index — which captures inflation
before it reaches consumers — rose 4.7% in July from a year ago, down
from a much larger 5.5% increase in June. On a monthly basis, wholesale
prices were unchanged from June to July, after they ticked down 0.1% the
previous month.
The figures follows the government’s consumer price inflation report,
released Wednesday, which also showed a modest cooling last month.
Still, consumer prices have risen faster than wages for the past four
months, underscoring the challenges many Americans have affording
necessities such as rent and utilities. If prices continue to outpace
wages, many consumers may be forced to dial back their spending in the
coming months.
Excluding the volatile food and energy categories, core wholesale
inflation dropped to 4.2% in July compared with a year earlier, down
from 4.7% in June. On a monthly basis, core prices 0.2%, down from 0.4%
from May to June.
After falling in early July, gas prices then rose later that month and
in early August, threatening to push inflation back up when August
figures are reported next month.
“The soft (producer prices) reading for July points to reduced
inflationary pressure for businesses in coming months,” said Ben Ayers,
senior economist at Nationwide. “While the renewed rise in fuel costs is
concerning, input costs beyond energy are cooling.”
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 Last month’s cooling gives Federal
Reserve officials more leeway to avoid a rate hike when it meets
next in September. Fed officials are debating whether they should
raise their key interest rate to combat inflation, or keep it
unchanged in hopes that inflation continues to cool on its own.
Wholesale prices can offer an early look at where consumer inflation
might be headed. Economists also watch it because some of its
components, notably healthcare and financial services, flow into the
Fed’s preferred inflation gauge — the personal consumption
expenditures, or PCE, index. That price index will be released in
about two weeks.
The PCE index uses data from the consumer price index as well. With
both those reports now released, economists forecast that when the
Fed's preferred gauge is issued Aug. 26, it will show yearly core
inflation likely remained unchanged in July, at about 3.3%, unlike
both the consumer and producer price indexes, which have slowed a
bit. That could raise concerns among some Fed officials that
inflation is too far above the central bank's target of 2% and
showing little sign of easing.
Fed officials are considering whether to hike rates after leaving
them unchanged so far this year. Last week, the government said
employers actually cut jobs in July, a sign of economic weakness
that could discourage the central bank from raising borrowing costs.
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