In July, wholesale inflation in the United States increased from previously low levels.
WASHINGTON (AP) — The U.S. Wholesale prices in the United States rose marginally in July, indicating that inflationary pressures had reduced this year after reaching worrying levels in 2022.
The Labor Department said on Friday that the producer price index, which monitors inflation before it reaches consumers, grew 0.8% in July 2022 compared to July 2022. The latest data came after a 0.2% year-over-year gain in June, the weakest yearly growth since August 2020.
Producer prices increased 0.3% from June to July, compared to no change from May to June. The rise last month was the largest since January. The month-to-month increase in wholesale inflation was driven by an increase in service charges, particularly for investment portfolio management. Wholesale meat costs jumped substantially in July as well.
According to analysts, the July increase in wholesale prices from the previous month’s low levels shows an overall lessening inflation trend.
The Labor Department data released on Friday represent prices charged by manufacturers, farmers, and distributors. The data may give an early indication of how quickly consumer inflation will climb in the coming months. Wholesale inflation has slowly declined since peaking at 11.7% in March 2022, despite the Federal Reserve’s 11 interest rate rises.
Excluding volatile food and energy costs, “core” wholesale inflation jumped 2.4% from July 2022 to July 2022, the same year-on-year increase reported for June. Core producer prices grew 0.3% from June to July after decreasing 0.1% from May to June when measured month to month.
The government stated on Thursday that consumer prices grew 3.3% year on year in July, a little increase from June’s 3% year-on-year gain. However, core consumer inflation grew by 0.2% from June to July, marking the weakest month-to-month increase in over two years.
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Inflation has slowed during the past year, getting closer to the Fed’s 2% objective while remaining stubbornly over it. The slowing pace of price rises, along with a strong labor market, has fueled optimism that the Fed will manage a tough “soft landing”: raising interest rates just enough to reduce borrowing and contain inflation without triggering devastating recession inflation.
Many economists and market observers believe the Fed’s most recent rate rise in July was the last. The Fed will evaluate several additional economic data before its next meeting on September 19-20 to decide whether to continue raising rates. They include another inflation monthly consumer price data, the most recent measurement of the Fed’s preferred inflation indicator, and the August jobs report. inflation
Inflation began to rise in 2021, spurred by an unexpectedly strong recovery from the pandemic recession of 2020. By June 2022, consumer prices had risen 9.1% from the previous year, the largest increase in four decades. Much of the price increase was caused by congested supply chains: the fast economic recovery swamped ports, industries, and freight yards. inflation
As a result, there were delays, parts shortages, and increased pricing. However, supply-chain backlogs have decreased in the last year, decreasing upward pressure on goods prices significantly. Long-lasting manufactured goods prices actually fell in June.