US producer inflation cools in July, helped by energy costs

US producer inflation decelerated in July, government figures revealed, as energy costs fell from the previous month following the war in the Middle East, according to the Labor Department. The Producer Price Index (PPI) increased 4.7% year-on-year, a drop from 5.5% growth in June. PPI remained unchanged on a month-to-month basis.

The decline was primarily due to a 3.1% decrease in energy prices from the prior month, which was less than the 4.4% reduction seen in June. This suggests that the energy shock caused by the Iran war is gradually easing. However, a permanent solution remains elusive, raising concerns that inflation may continue. Global energy prices have skyrocketed since US-Israeli strikes on Iran in late February, forcing Tehran to block access to the Strait of Hormuz, a crucial maritime route for global energy transport.

Gasoline pump prices in the US have risen, exerting additional strain on businesses' transportation expenses. Over half of the decline in goods prices in July was attributed to lower gasoline prices, the Labor Department stated. Additionally, indexes for fresh and dry vegetables, diesel fuel, jet fuel, residual fuels, and thermoplastic resins and materials also decreased.