Wholesale inflation holds steady and improves on expectations

Wholesale inflation held steady in June due to a decline in services costs and despite speculations of an increase as a result of tariffs.

The producer price index (PPI), which measures the change in prices of goods and services at the first stage of the supply chain, was unchanged from May, when it had risen to 0.3% (0.1% in the preliminary estimate), which was better than analysts' expectations, reported the Department of Labor.

On a year-over-year measure, the PPI reached 2.3% in June, down from 2.7% in May.

This was due to service costs falling 0.1% and the price of goods rising 0.3%, the report added.

Lower prices at airlines, hotels and auto dealers drove down the overall index.

Goods prices rose as businesses grappled with tariff announcements from the Trump administration. However, the impact on the consumer price index has not been as great as analysts expected.

Wholesale prices usually anticipate changes in consumer inflation and in the Personal Consumption Expenditure (PCE) index, the Fed's benchmark for its monetary policy. The moderation of the PPI gives some respite to the economy.