Wholesale prices in the U.S. fell in June—a development the market did not expect

Wholesale prices in the U.S. unexpectedly fell in June due to lower energy costs, the U.S. Bureau of Labor Statistics reported on July 15. The seasonally adjusted Producer Price Index (PPI) fell 0.3% compared with May, while analysts surveyed by Dow Jones had expected the index to remain unchanged, according to CNBC. However, the core PPI—which excludes fuel and food prices—also fell short of forecasts: it rose 0.2%, compared with expectations of 0.3%.

This has improved the overall inflation picture, the TV channel notes. It was reported yesterday that consumer prices fell on a monthly basis for the first time in six years, and overall inflationary pressure turned out to be weaker than expected—also thanks to a sharp drop in energy prices, primarily gasoline.

According to traders’ estimates, the probability of a Fed rate hike at its upcoming July meeting has more than halved—from 39% to 16%—following the release of consumer inflation data. And on July 15, it fell even further—to 9%, according to the CME’s FedWatch tool. Nevertheless, traders still fear that the Fed will tighten policy in September, although the probability of this scenario has also decreased—from 63% to 47%.

Regulatory chief Kevin Warsh, speaking before a House committee on Tuesday, said that the slowdown in inflation in June does not mean the fight against rising prices is over. According to him, this is not yet a reason to declare “mission accomplished.”

This article was AI-translated and verified by a human editor