Wholesale Prices Fall for 3rd Consecutive Month
By wchung | 06 Aug, 2026

Wholesale prices fell for a third consecutive month as another drop in energy costs and the biggest plunge in food costs in eight years banished inflation in June.

Wholesale prices dropped 0.5 percent last month, following declines of 0.1 percent in April and 0.3 percent in May, the Labor Department reported Thursday. Core inflation, which excludes food and energy, posted a modest 0.1 percent increase.

Economists believe the weak recovery from a deep recession will keep inflation under wraps over the next year, giving the Federal Reserve the leeway to keep interest rates low in an effort to battle weak growth and high unemployment.

The Fed on Wednesday released a new economic outlook in which it lowered its growth forecast and also trimmed an already low projection for inflation, underscoring the view that it still sees fighting weak growth as its primary mission at the moment.

For June, food costs fell 2.2 percent, the biggest decline since April 2002. It reflected huge prices drops for vegetables, led by a big decline in the price of tomatoes, which are now retreating after an earlier weather-related jump in prices.

Energy costs dropped 0.5 percent, the third straight fall, as lower global crude oil prices have pushed energy prices lower. The cost of gasoline dropped 1.6 percent in June while home heating oil fell 8.1 percent, the biggest decline in 11 months.

The overall June decline in prices was the third consecutive monthly drop, the longest stretch since a similar three-month fall from October through December 2008, a period when extreme turbulence in financial markets sent the economy into a tailspin.

The 0.1 percent rise in core wholesale inflation, excluding food and energy, followed two months of 0.2 percent increases. Over the past 12 months, core inflation has risen by just a very modest 1.1 percent.

The price of heavy duty trucks rose 2.5 percent in June, the biggest increase in three years, and cigarette prices rose 1.4 percent, but the price of light trucks, the category that includes sport utility vehicles, dorpped by 1 percent.

The PPI report was released a day ahead of Friday’s report on consumer prices. Economists surveyed by Thomson Reuters believe the report on consumer prices will also show an absence of inflation with the overall figure and the core inflation both showing no change in June.

The absence of inflationary pressures reflects the worst recession to hit the country since the 1930s. While the economy has been growing again since last summer, the downturn was so steep that it has left plenty of slack capacity in the system from lower factory operating rates to plenty of unemployed workers trying to get jobs.

That means companies don’t have much power to push through price increases on their products while the high level of unemployment means workers don’t have much bargaining power to get higher wages.

The lack of inflationary pressures has allowed the Federal Reserve to keep a key interest rate at a record low of zero to 0.25 percent for the past 18 months in an effort to promote an economic recovery and many analysts believe it will be another year before the central bank starts raising rates.

MARTIN CRUTSINGER, AP Economics Writer WASHINGTON