WASHINGTON (AP) — U.S. wholesale inflation fell from May to June on plunging energy prices, but intensifying hostilities with Iran are clouding the outlook.
The Labor Department reported Wednesday that its producer price index — which captures inflation before it reaches consumers — dropped 0.3% from May. Compared to a year earlier, wholesale prices were up 5.5% in June, decelerating from a 6% increase the month before. Gasoline prices plunged 12% in June but are still up nearly 43% from June 2025, pushed higher by the Iran war.
Excluding volatile food and energy prices, so-called core wholesale prices were up 4.7% from June 2025 and 0.2% from May.
Wholesale inflation was cooler than economists had forecast.
The producer price report came out a day after the Labor Department said consumer prices dropped 0.4% from May to June, the biggest monthly drop in four years. Compared to a year earlier, they were up 3.5% last month, down from 4.2% in May. The June inflation numbers were much cooler than forecasters had expected, reducing pressure on the Federal Reserve to raise interest rates this year.
But energy prices have ratcheted higher since President Donald Trump on Monday announced a new blockade in the Strait of Hormuz, through which a fifth of the world’s oil and natural gas passes. Many Americans are already frustrated with the high cost of living, dimming the prospects of Trump’s Republican Party in November’s midterm elections.
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