The cost of goods—including gas, electronics, and appliances—dropped by 0.5% in June. This marks the fourth decline in the first six months of 2024. However, services costs jumped 0.6% in June, following significant increases in the previous two months.
Rising service prices for travel, recreation, personal care, health treatments, and similar sectors have been major drivers of inflation in recent years. Over the past year, service prices have risen by 3.5%, compared to a modest 1% increase in goods prices.
Before the pandemic, service prices were rising about 2.5% annually. During the height of inflation in 2022, the annual cost of services surged by as much as 9.4%.
In June, wholesale costs rose slightly faster than expected but not enough to counter the recent trend of slowing inflation.
According to government data released on Friday, the producer price index increased by 0.2% last month, slightly above Wall Street’s forecast of 0.1%.
Recent low inflation readings increase the likelihood of the Federal Reserve cutting interest rates by September. The Fed aims to reduce the annual inflation rate to 2%, as measured by its preferred PCE index.
Meanwhile, the annual increase in wholesale prices rose to 2.6% in June, up from 2.4% in the previous month.
The 12-month rise in core wholesale prices, which exclude the volatile categories of food, energy, and trade margins, slowed to 3.1% from 3.3%.
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