Wholesale inflation in the United States eased in July compared to a year earlier, with the deceleration coming in steeper than anticipated, driven by a continued drop in energy and food prices.

The producer price index climbed 4.7% from July 2025, following a 5.5% annual increase in June, according to data released Thursday by the Bureau of Labor Statistics. On a month-over-month basis, the PPI remained flat.

When stripping out volatile food and energy categories, core producer prices climbed 4.2% from a year ago and 0.2% compared with June.

This PPI report follows consumer price data that showed moderating inflation, adding to evidence that the initial war-driven energy shock is continuing to fade. However, a recent flare-up in the Middle East is raising concerns about persistent inflation.

Federal Reserve officials will have access to additional consumer and producer price data before their next policy decision in mid-September, along with a fresh report on the labor market. So far, policymakers are having to weigh lingering inflation pressures against a recent slowdown in hiring.

Energy prices declined 3.1% from June, marking the second straight monthly drop, while food prices fell by the most since the start of the year.

Several components of the PPI are also of particular interest to the Fed because they feed into its preferred inflation gauge, the personal consumption expenditures price index.

Those categories offered mixed signals. Portfolio management fees jumped by the most in more than a year, while hospital outpatient care also posted a big increase. Prices for physician care and hospital inpatient care were tame.

The Bureau of Economic Analysis is scheduled to release July PCE price data, along with income and spending figures, on Aug. 26.