Wholesale prices ease, but inflation measure still near double digits

Wholesale prices fell in July, the Labor Department reported Thursday, the first month-to-month drop in more than two years and another sign that historically high inflation is easing slightly.

The producer price index, which measures inflation before it reaches consumers, rose at an annual rate of 9.8% in July. That level is still high, but it was down from June’s annual rate of 11.3%.

The monthly PPI declined 0.5% in July, a reversal from a 1% increase in June and the first monthly drop since April 2020.

Stocks rose in mid-morning on the softer-than-expected inflation report.

The wholesale price report came a day after the government said consumer prices showed no change in July — a slight improvement from inflation levels in June.

The slight easing of inflationary measures is largely due to declining energy costs. Gasoline prices dipped to just under $4 per gallon Thursday for the first time in more than five months. AAA said the national average for a gallon of regular was $3.99.

Republicans said inflation is still unacceptably high, noting that July marked the 16th consecutive month that the PPI has been above an annual rate of 5%.

“Prices are soaring and real wages are falling, yet Democrats want to raise taxes during a recession,” said Republican National Committee Chairwoman Ronna McDaniel. “As Joe Biden acts like everything is fine while spending his days at the beach, families struggle to afford gas and groceries. The latest economic data is another reminder Democrats’ reckless agenda is hurting Americans.”

President Biden left Washington on Wednesday for a vacation in Kiawah Island, South Carolina. House Democrats are preparing to vote on Friday to approve the president’s $740 billion climate-and-tax bill along party lines.

Rep. Kevin Brady of Texas, top Republican on the House Ways and Means Committee, said wholesale prices eased in July “due to a shrinking economy under President Biden and slower demand for fuel.”

“This will get worse with Manchin-Biden tax hikes heading into a recession, which will translate into higher prices for consumers,” Mr. Brady said, referring to Democratic Sen. Joe Manchin III of West Virginia. “Worse, Treasury’s own recent guidance makes clear these small businesses are absolutely first in line for new IRS audits—just as they’re trying to stay afloat.”