Wholesale Inflation Falls 0.3% as Iran War Keeps Energy Prices Elevated

The U.S. Labor Department reported a 0.3% decline in the June producer price index (PPI), driven by falling energy prices, while tensions with Iran are keeping energy prices elevated. Consumer prices dropped 0.4%, the largest monthly decline in four years, though inflation remains above the Fed’s 2% target. Gasoline prices fell 12% but remain 43% higher year-over-year, while core PPI (excluding food and energy) rose 4.7%. The annual wholesale price increase slowed to 5.5% from 6%. Fed Chair Warsh warned of 'no tolerance for persistently elevated inflation.' Markets are watching for potential relief in energy prices if the Strait of Hormuz reopens soon.

The Fed’s stance on inflation will be critical as oil prices remain volatile, with the Strait of Hormuz blockade adding uncertainty to global supply chains.