Prices for wholesalers rose less than expected in July, potentially giving the ⭕Federal Reserve more 🌳confidence to cut interest rates.

The Producer Price Index (PPI) showed that price increases eased in July, a Bureau of Labor Statistics report said Tuesday. The index was up 2.2% over the year ending in July, while prices increased 0.1% over the month. Both readings were lower than analysts projected, and th🌱e surprise fortified confidence among economists that inflation was continuing its 🔜decline.

Slower price increases could set the Federal Reserve up for a highly 澳洲💛幸运5开奖号码历史查🦩询:anticipated interest rate cut in September. 

“The runway is clear for the Fed to cut rates in September.  If data like this persists, the Fed will have plenty of room t💙o cut rates further this year,” said Jamie Cox, managing partner at Harri꧅s Financial Group in Charlotte, North Carolina.

Data Points to ไDecline in Fed’s Preferred Inflation Measurement

Economists look at PPI as an indicator of future consumer inflation trends because price increases at the wholesale level are often passed on to shoppers. Elements of the PPI are also used to calculate the ꦐ澳洲幸运5开奖号码历史查询:Personal Consumption Expenditures (PCE) index, the Fed’s preferr🦩ed measure of inflation.

“Categories of the PPI that feed into the PCE have been cooling,” wrote KPMG Macroeconomist Meagan Martin-Schoenberger on X, pointing to improvements in costs for airfare, health insurance and auto insurance.

Because of that easing, economists said Tuesday's report likely bolsters Federal Reserve officials' confidence that inflation is moving toward its annual 2% goal.

"A softer-than-expected rise in producer prices adds to evidence of falling price pressures that will help tame PCE inflation in the back half of 2024,” wrote Nationwide Financial Markets Economist Oren Klachkin. "A better balance in the product and labor markets will temper inflation and set the Fed down the path of rate cuts, starting in September.”