Wholesale prices dropped 0.5 percent in July to hit a 9.8 percent annual increase, down from an 11.3 percent annual increase in June as 40-year high inflation continued to show signs of easing.
The Labor Department’s Producer Price Index (PPI) showed that demand for goods dropped 1.8 percent from July to June as demand for services increased only 0.1 percent.
Taking out the more volatile categories of food, energy and trade, final demand goods rose 0.2 percent in July to hit a 5.8 percent on the year, down from 6.4 percent from last month.
The PPI measures the prices that businesses pay to each other as input costs for their goods and services. Thursday’s numbers follow Wednesday’s release of the consumer price index (CPI), which showed that annual retail inflation dropped in July to 8.5 percent from 9.1 percent in June.
While the CPI is a more direct measure of the inflation that consumers actually feel at the pump and in the grocery store aisle, the PPI more closely tracks inflation on the supply side.
According to some metrics, two-thirds of the current inflation in the economy is due to supply-related issues, so Thursday’s numbers could be an indication that inflation is now on a downward path.