Wholesale inflation mostly cooled last month in latest sign that price pressures are slowing

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U.S. wholesale price increases mostly slowed last month, the latest evidence that inflation pressures are cooling enough for the Federal Reserve to begin cutting interest rates next week

WASHINGTON — U.S. wholesale price increases mostly slowed last month, the latest evidence that inflation pressures are cooling enough for the Federal Reserve to begin cutting interest rates next week.

The Labor Department said Thursday that its producer price index — which tracks inflation before it reaches consumers — rose 0.2% from July to August. That was up from an unchanged reading a month earlier. But measured from a year ago, prices were up just 1.7% in August, the smallest such rise since February and down from a 2.1% annual increase in July.

Excluding food and energy prices, which tend to fluctuate from month to month, so-called core wholesale prices moved up 0.3% from July and have risen 2.3% from August 2023.

Taken as a whole, last month's wholesale price figures suggest that inflation is moving back toward the Fed's 2% target level. After peaking at a four-decade high in mid-2022, the prices of gas, groceries and autos are either falling or rising at slower pre-pandemic rates. On Wednesday, the government reported that its main inflation measure, the consumer price index, rose just 2.5% in August from a year earlier, the mildest 12-month increase in three years.

The pickup in core wholesale prices from July to August was driven by a 0.4% rise in the cost of services, such as internet access and banking.

Goods prices were unchanged from July to August, with the cost of energy falling 0.9%. Wholesale food prices ticked up just 0.1% last month and are down 0.8% compared with a year earlier, a sign that grocery store prices,