The plunge in energy prices pushed down overall PPI inflation, to a still very high 5.5%. It has been zigzagging higher since mid-2023.

By Wolf Richter for WOLF STREET.

Energy prices plunged in June off the spike in the prior months. And this plunge in energy prices spread through the Producer Price Index final demand (PPI), which tracks inflation in prices that companies pay each other, and which dropped by 0.28% seasonally adjusted in June from May (annualized -3.3%, blue in the chart).

Year-over-year, the PPI rose by 5.5%, still a lot of inflation, but lower than the multi-year high in May (red). It has been zigzagging higher ever since the low point in mid-2023.

Beyond the plunge in energy, producer-price inflation accelerated in June from May and year-over-year because inflation in services accelerated.

The services PPI rose by 0.21% in June from May (+2.5% annualized), seasonally adjusted, after the negative reading in the prior month.

Year-over-year, the services PPI accelerated to 4.6% (red line). That’s a lot of inflation in services. It has been zigzagging higher since the December 2023 low.

Within the services PPI, month-to-month:

• Trade services (19% of overall PPI) rose by 0.4% in June from May, after the 2.3% plunge in May and the 1.3% spike in April.
• Transportation & warehousing services (4.9% of overall PPI) dipped by 0.1% in June from May, after a series of month-to-month spikes.
• “Other services” (38% of overall PPI) ticked up by 0.1% in June from May.

The PPI for core goods, which excludes energy and food components, rose by 0.19% (+2.3% annualized) in June from May, seasonally adjusted, on top of the spikes in the prior two months (blue line in the chart below).

The year-over-year core goods PPI rose by 5.1%, a slight deceleration from the prior month, and both were the worst since February 2023 (red line). It has been zigzagging higher since March 2024.

These were prices that companies paid other companies. In 2025, those prices started to include tariffs that companies were passing on to each other, though consumer-facing companies had a very hard time or were incapable of passing on those price increases to consumers without losing a lot of sales and market share. So consumer-facing companies resisted price increases from their suppliers.

Core PPI Final Demand, which excludes energy and food components, accelerated to +0.20% (+2.4% annualized) in June from May, seasonally adjusted (blue in the chart below).

Year-over-year, core PPI accelerated by a hair to 4.7%. The last three months were the worst since January 2023. It has been zigzagging higher since the low in December 2023 (red in the chart below).

The core PPI is dominated by the services PPI, which is why its trajectory looks similar to the services PPI.

The PPI final demand for energy plunged by 6.4% in June from May (not annualized), after the three months of spikes.

Year-over-year, the energy PPI is still up by 23.0%.

The chart shows the price level of the energy PPI, rather than the percentage change.

The PPI final demand for food fell by 0.58% (-6.8% annualized) in June from May (blue).

Year-over-year, it rose by 2.1% (red). Food prices are very high after the surge in 2021 through 2022, but from those high levels have been increasing only moderately over the past year.

In case you missed it:  Gasoline Plunged in June and lots of Month-to-Month CPI Squiggles Happened to Drop Simultaneously, but that Won’t Last

 

Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the mug to find out how: