Wholesale price inflation slows last month as gas, food costs fall

Wholesale inflation decreased last month, as gas prices reversed a spike from the Iran war and other costs cooled, suggesting consumer inflation may slow down in the coming months, according to the Labor Department's producer price index. The index rose 4.7% in July compared to a year ago, down from a 5.5% increase in June. On a monthly basis, wholesale prices remained steady, having slightly decreased in the previous month.

Core wholesale inflation, which excludes volatile food and energy categories, dropped to 4.2% in July from a year earlier, down from 4.7% in June. Monthly core prices also declined by 0.2% from May to June. While gas prices initially fell in July, they later rose in August, potentially pushing inflation up in the next report. Despite this, the cooling in wholesale inflation offers more flexibility for Federal Reserve officials to avoid a rate hike during their September meeting.

The Fed is considering whether to raise interest rates or keep them unchanged, hoping inflation will continue to decrease. However, job cuts reported last week in July may discourage the central bank from raising borrowing costs.