Wholesale Inflation Falls Throughout Supply Chain

A picture of a graphic depicting inflation with an upwards arrow

The Bureau of Labor Statistics (BLS) reported Thursday wholesale inflation falling month-to-month in July for the first time since 2020. Still, wholesale inflation remains 9.8% higher than it was in July 2021.

The producer price index, a measure of prices paid to goods and services producers, declined 0.5% in July. However, most of the decline came in energy, which declined 9% from the previous month. Backing out food and energy, wholesale inflation rose 0.2% from June.

Each supply-chain stage posted lower goods input for demand. All were heavily influenced by falling oil and gas prices from June.

Goods inputs for Stage 4 intermediate demand, measuring the products purchased by industries primarily producing output sold to final demand, such as RV manufacturers, fell 0.9% in July. Year-over-year Stage 4 demand rose 8.9%, down from the 10.8% registered in June.

Stage 3 intermediate demand, measuring suppliers to Stage 4 producers such as RV manufacturers, fell 2.6% in July. Overall, demand rose 15.4% in the past 12 months, down from 18.1% in June.

Stage 2 intermediate demand, suppliers to Stage 3 suppliers, fell 11.9% in the month. Overall, demand rose 15.6% in the past 12 months, down from the 12-year high 29.4% increase in June. However, as energy, iron and steel scrap prices fell, industrial chemicals and fuels and lubricants retail prices still climbed higher from June.

Stage 1 goods demand fell 1.7% in the month. Overall, demand in the past 12 months rose 12.2%, down from 15.8% registered in June. Among prices moving higher in July in Stage 1 were those related to shipping – courier, messenger and U.S. postal services.

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