U.S. Producer Prices Held Flat in July, Easing Inflationary Pressures
By TopHolding Editorial · Wednesday, August 12, 2026 at 8:00 PM
U.S. producer prices were unexpectedly unchanged in July, below expectations for a 0.2% increase, signaling a potential deceleration in inflation. The moderation was primarily driven by falling goods prices, while services costs continued to rise.
U.S. producer prices unexpectedly held steady in July, coming in below the consensus forecast for a 0.2% increase. This flat reading suggests a potential easing of inflationary pressures within the economy, though year-over-year producer prices remain elevated at 4.7%. The muted headline figure was influenced by a notable decline in goods prices, which fell 0.7%, effectively offsetting a 0.2% rise in services costs.
The decline in goods prices was broad-based, with energy prices dropping 3.1% and food prices decreasing 0.9% for the month. Gasoline prices, in particular, saw a significant 5.7% reduction, contributing substantially to the overall deceleration. Other energy-related categories, such as diesel fuel, jet fuel, and crude petroleum, also experienced declines. Over the past year, goods prices have risen 6.5%.
Conversely, prices for services advanced 0.2% in July. This increase was largely propelled by a substantial 6.5% jump in portfolio management fees. However, this rise was partially mitigated by a 1.8% decrease in transportation and warehousing prices, marking their most significant decline since 2023. This suggests that the impact of elevated fuel costs on the transportation sector may be waning. Annually, services prices are up 3.9%.
The moderation in pricing also extended further up the supply chain. Prices for intermediate processed goods fell 0.6% in July, while intermediate unprocessed goods saw an even sharper decline of 1.8%. These reductions were primarily attributed to lower prices for energy processing. Despite these monthly declines, intermediate processed goods prices are up 9.9% year-over-year, and unprocessed goods prices have risen 7.1% over the same period.
Excluding the volatile food and energy components, "core" producer prices increased 0.2% in July. The twelve-month change for core producer prices eased to 4.2%, though it remains above the 3.5% increase recorded for the twelve months ending July 2025. The overall producer price index, up 4.7% over the past year, shows improvement from recent months but still exceeds the 3.2% increase observed for the twelve months ending July 2025. While this report may alleviate some immediate pressure on the Federal Reserve regarding interest rate hikes, broader inflationary trends are closely tied to the money supply, which has grown 5.5% over the past year, below the 6.0% trend seen before the recent period of higher inflation.
In related economic news, initial jobless claims rose by 9,000 last week to 209,000, which remains a low figure historically. Continuing claims declined by 22,000, settling at 1.777 million.
Key terms
1. Producer Price Index (PPI): A measure of the average change over time in the selling prices received by domestic producers for their output. It tracks prices from the perspective of the seller.
2. Core PPI: The Producer Price Index excluding volatile food and energy prices, often used as a better indicator of underlying inflation trends.
3. Intermediate Goods: Products that are used in the production of other goods rather than being sold directly to consumers. These can be "processed" (e.g., lumber) or "unprocessed" (e.g., raw crude oil).
Source: This article is adapted from First Trust Portfolios' Data Watch commentary on this data release. The original is available at ftportfolios.com.