Wholesale prices fell in June as energy costs dropped
The Labor Department said producer prices declined 0.3% in June, easing rate pressure even as the Iran war threatens energy costs.
By Hana Yoshida · Markets Reporter
3 min read
U.S. wholesale prices fell in June as energy costs dropped, giving the Federal Reserve some relief on inflation. The decline may prove short-lived, with Fortune reporting that fighting involving Iran and a new U.S. blockade in the Strait of Hormuz have pushed energy risks back into focus.
The Labor Department said Wednesday that the producer price index, a measure of prices before they reach consumers, fell 0.3% from May to June. That was the largest monthly decline since April 2025 and followed a 0.6% increase in May, according to the department.
From a year earlier, producer prices rose 5.5% in June, the Labor Department said. That marked a slowdown from the 6% annual increase recorded in May.
Energy accounted for much of the monthly improvement. The Labor Department said gasoline prices dropped 12% in June, while food prices also moved lower. Even after the monthly fall, gasoline remained nearly 43% above its June 2025 level, a rise Fortune attributed to the Iran war.
Underlying price pressure was steadier. Excluding food and energy, the Labor Department said core producer prices rose 0.2% from May and 4.7% from June 2025.
The wholesale figures arrived one day after the Labor Department reported a 0.4% monthly drop in consumer prices from May to June, the largest such decline in four years. Consumer prices were 3.5% higher than a year earlier in June, down from a 4.2% annual increase in May, according to the department.
The June inflation readings were cooler than forecasters had expected, Fortune reported, reducing pressure on the Federal Reserve to raise interest rates this year. Inflation remains above the Fed’s 2% target.
Fed Chair Kevin Warsh, appearing before Congress on Tuesday for the first time since taking the job on May 22, said the central bank has “no tolerance for persistently elevated inflation.”
Fortune reported that energy prices have risen since President Donald Trump announced a new blockade Monday in the Strait of Hormuz. The waterway carries one-fifth of the world’s oil and natural gas, according to Fortune.
High living costs have already angered many Americans, and Fortune reported that the issue is weighing on Republican prospects in November’s midterm elections.
David Russell, global head of market strategy at online brokerage TradeStation, said the Fed faces little immediate pressure, but warned that oil prices could drive the inflation picture later. “Energy saved the day in June, but that might become ancient history if the Strait of Hormuz doesn’t open soon,” Russell said.
Economists track wholesale prices because they can signal where consumer inflation may head next. Fortune reported that parts of the producer price index, including healthcare and financial services, also feed into the Fed’s preferred inflation measure, the personal consumption expenditures index.
This story draws on original reporting from Fortune.