Prices at the wholesale level slipped in July, the first decline in 11 months and further evidence that inflation remains a no-show in the economy.
The Labor Department said Thursday that its producer price index, which measures inflation pressures before they reach the consumer, edged down 0.1 percent last month, reflecting a third month of declines in energy prices and a flat reading for food. The July result followed a tiny 0.1 percent gain in June. It was the first drop in wholesale prices since a decline of 0.2 percent last August.
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Core inflation, which excludes volatile food and energy costs, also fell last month by 0.1 percent. Over the past 12 months, wholesale prices are up a moderate 1.9 percent, while core prices have risen 1.8 percent.
Inflation has been low throughout this recovery. For the past five years, it has fallen below the Federal Reserve's target for annual price gains of 2 percent a year. At the beginning of this year, inflation by a gauge preferred by the Fed did climb as high as 2.2 percent gain in February compared to a year ago. But it has since backtracked and in June registered a 12-month gain of just 1.4 percent.
The Fed raised interest rates in March and June, but economists believe it will put further rate hikes on hold until at least December, waiting to see if inflation resumes rising again to the 2 percent target. Fed Chair Janet Yellen told Congress last month that she believes tight labor markets will start producing higher wage gains and increased inflation. Unemployment in July returned to a 16-year low of 4.3 percent.
The 0.1 percent dip in wholesale prices in July reflected a 0.3 percent drop in energy costs in July, which followed even bigger declines in May and June. Last month, the gasoline, natural gas and home heating oil all showed declines.
Food costs showed no gain in July after rising by 0.6 percent in June.
The Labor Department will release its report on consumer prices on Friday.