US wholesale inflation cools in July as gas prices ease

Consumer prices have outpaced wages for four straight months

WASHINGTON — The Labor Department said its producer price index — which captures inflation before it reaches consumers — was unchanged from June to July, a pause in the wholesale inflation pressures that built earlier this year as energy costs spiked during the Iran war. The flat monthly reading followed a 0.1% decline the previous month.

On a year-over-year basis, the producer price index rose 4.7% in July, down from a 5.5% increase in June. The annual figure remains elevated but marks a step down from the highs recorded earlier in the year as energy markets have eased from wartime levels.

Gasoline prices were a major contributor to the July cooling, reversing some of their surge during the Iran war. Other wholesale costs also moderated, according to the report.

The wholesale reading came a day after the Labor Department’s consumer price index release for July, which showed consumer prices rising over the prior year — a modest cooling from earlier in the year. Wholesale prices typically lead consumer prices with a lag of several months, and the wholesale data offered an early signal that retail inflation could continue to ease in the months ahead.

Still, the consumer side of the economy continues to challenge household budgets. Consumer prices have risen faster than wages for the past four months, underscoring the challenges many Americans have affording necessities. If prices continue to outpace wages, many consumers may be forced to dial back their spending in the coming months.

The producer price index captures inflation before it reaches consumers.