Wholesale prices in the U.S. remained unchanged in July, falling short of the anticipated 0.2% increase, according to the Bureau of Labor Statistics. This flat reading follows a revised 0.1% decline in June and marks another sign that inflation pressures at the wholesale level are easing. The core producer price index, which excludes food and energy, rose by 0.2%, below the expected 0.3% gain, while the core PPI excluding trade services increased 0.4%. On an annual basis, headline wholesale prices climbed 4.7%, and core prices were up 4.2%, based on unadjusted figures.

This data comes amid broader indications that inflation, which surged earlier this year due to factors like the Iran conflict and tariffs under former President Donald Trump, is starting to moderate. Energy prices contributed to the decline in goods costs, falling 3.1%, driven largely by a 5.7% drop in gasoline prices. Food prices also fell by 0.9%, while core goods prices saw a modest 0.1% increase. Meanwhile, service prices rose 0.2%, heavily influenced by a 6.5% jump in portfolio management fees.

Financial markets responded positively to the report, with stock futures climbing and Treasury yields declining. The data prompted traders to further reduce expectations of a Federal Reserve interest rate hike at the September meeting. Several Fed officials have expressed concern over inflation but seem to acknowledge the easing pipeline pressures reflected in this latest wholesale price report. The Fed’s target inflation rate remains 2%, but the headline consumer inflation rate stood at 3.4% annually in July, above that goal.

In related economic news, initial jobless claims rose slightly to 209,000 for the week ending August 8, surpassing estimates. Fed officials now appear to lean toward possible rate increases in October or December rather than September, given recent cooling signs in inflation metrics. This shift highlights the cautious approach being taken as policymakers balance inflation control with ongoing economic uncertainties.