The wholesale inflation rate in July was lower than anticipated, increasing by only 0.1%.

In July, the Federal Reserve was given more room to lower interest rates because wholesale inflation increased less than anticipated.

The Labor Department's Bureau of Labor Statistics reported Tuesday that the producer price index, which measures the selling prices producers receive for goods and services, increased 0.1% on the month. However, excluding volatile food and energy components, core PPI remained unchanged.

According to a survey by Dow Jones, economists were seeking a 0.2% rise in both the all-items and core readings.

An additional key indicator, excluding trade services, exhibited a 0.3% rise.

The year-over-year increase in headline PPI was 2.2%, a significant decrease from the 2.7% reading recorded in June.

Stock market futures rose following the news while Treasury yields moved lower.

Despite a 0.6% increase in final demand goods prices, the wholesale inflation reading remained relatively tame. This was due to a 1.9% surge in energy, with gasoline prices rising by 2.8%.

The BLS reported that a 0.2% slide in services was the largest move lower since March 2023. Trade services prices fell 1.3%, while margins for machinery and vehicles wholesaling tumbled 4.1%. However, an increase of 2.3% in portfolio management helped to offset some of the decline in services prices.

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