In June, US inflation decreased by 0.4%, primarily due to a 12% drop in gasoline prices. This reduction significantly impacted both consumer and producer prices, with the producer price index (PPI) falling 0.3% to 5.5%, below the expected 6.2%.
The decline in gasoline costs accounted for nearly two-thirds of the overall 1.4% drop in prices for final demand goods. Without this fuel price reduction, producer prices would have likely increased slightly. Meanwhile, the core PPI also fell to 4.7%, below the anticipated 5.2%.
However, the relief from falling energy prices appears short-lived. Since the collapse of the ceasefire between the US and Iran, Brent crude prices have surged 18% within a week. The recent blockade in the Strait of Hormuz contributed to this increase, with Brent reaching over $85 per barrel after rising by 9.6% in a single day.
According to the Bureau of Labor Statistics, prices for processed goods used in business fell by 1.2%, while unprocessed materials saw a drop of 4.1%. Despite these decreases, service prices remained more stable, with trade margins increasing by 0.4% and core producer prices rising 0.2% from the previous month. The energy relief, which followed the ceasefire established in mid-June, is now threatened by renewed tensions in the region.
The US Central Command reported that the naval blockade took effect on July 8, causing sharp declines in oil transit through the Hormuz Strait, which carries about 20% of the world’s oil. Despite claims of shortages, the Department of Energy noted that oil flows remained consistent with typical levels due to military assistance.
This material is for informational purposes only and does not constitute financial advice.
