U.S. Producer Prices Flat in July 2026 as Annual PPI Eases to 4.7%

The Producer Price Index for final demand was unchanged in July 2026 on a seasonally adjusted basis, after edging down 0.1 percent in June and rising 0.5 percent in May. On an unadjusted basis, final demand prices increased 4.7 percent for the 12 months ended in July, down from 5.5 percent for the 12 months ended in June.

A flat headline is not a quiet month underneath it. A 0.2-percent increase in final demand services and a 2.2-percent advance in final demand construction offset a 0.7-percent decrease in final demand goods. The index that strips out the volatile pieces — final demand less foods, energy, and trade services — rose 0.4 percent, after inching up 0.1 percent in June. That measure is also up 4.7 percent over the year.

The two 4.7 percent figures arriving together is the fact worth sitting with. The headline annual rate has come down from 5.9 percent in May, and the core-equivalent measure has come down from 5.0 percent. They have converged, which means the deceleration in the headline is no longer being carried by energy and food alone.

Goods vs Services Pulled in Opposite Directions

Final demand goods fell 0.7 percent in July after moving down 1.4 percent in June. Within goods, prices for final demand energy declined 3.1 percent and final demand foods moved down 0.9 percent, while final demand goods less foods and energy increased 0.1 percent.

BLS traces more than half of the July goods decrease to gasoline, which fell 5.7 percent. Fresh and dry vegetables, diesel fuel, jet fuel, residual fuels, and thermoplastic resins and materials also declined. Moving the other way, prices for motor vehicles and equipment rose 0.3 percent, and the indexes for electric power and for grains increased.

Final demand services advanced 0.2 percent after rising 0.5 percent in June. The composition inside services is the part that matters:

• Services less trade, transportation, and warehousing moved up 0.6 percent
• Transportation and warehousing services decreased 1.8 percent
• Trade services decreased 0.1 percent

So the entire services increase — and then some — came from the residual category, while the two logistics-linked components fell. Leading the services increase, the index for portfolio management advanced 6.5 percent. Margins also rose for health, beauty, and optical goods retailing, for automobiles and automobile parts retailing, for lawn, garden, and farm equipment and supplies retailing, and for food and alcohol retailing and wholesaling. Against that, prices for truck transportation of freight fell 1.8 percent, and the indexes for machinery and vehicle wholesaling and for securities brokerage, dealing, and investment advice decreased.

A services increase resting on portfolio management is a fragile one. That index tracks asset-based fee revenue and moves with market levels rather than with the cost of producing anything; it is among the least persistent lines in the final demand services basket.

Upstream Pressure Kept Falling

The intermediate demand stages, which lead final demand by construction, kept deflating in July:

• Processed goods for intermediate demand declined 0.6 percent, after decreasing 1.1 percent in June, and are up 9.9 percent over the 12 months ended in July
• Unprocessed goods for intermediate demand fell 1.8 percent, after falling 6.4 percent in June, and are up 7.1 percent over the year
• Services for intermediate demand rose 0.5 percent

Within processed goods, processed energy goods fell 3.1 percent and processed foods and feeds decreased 0.5 percent, while processed materials less foods and energy edged up 0.1 percent. Over half of the processed-goods decline came through diesel fuel, down 6.7 percent, with jet fuel, basic organic chemicals, gasoline, thermoplastic resins and materials, and meats also falling. Lumber ran the other way, increasing 5.0 percent.

Within unprocessed goods, unprocessed energy materials dropped 7.4 percent, while unprocessed nonfood materials less energy rose 1.6 percent and unprocessed foodstuffs and feedstuffs rose 0.7 percent. Crude petroleum fell 11.9 percent and led the decline; aluminum base scrap increased 5.8 percent.

Two months of falling crude and refined-product prices at the unprocessed and processed stages have not yet fully arrived at final demand — energy is still up 17.9 percent over the year at the final demand stage. The pipeline is pointing down, and the annual comparisons have further to fall on that basis alone.

Where This Leaves the Inflation Picture

The cleanest read on July is that the goods side of producer inflation is deflating and the services side is not. Final demand goods less foods and energy rose only 0.1 percent, and motor vehicles was the notable increase in a month otherwise dominated by declines. Final demand services less the trade and transportation components rose 0.6 percent, the piece of the report least likely to reverse on an energy swing.

That split is why the flat headline and the 0.4-percent core-equivalent reading can coexist without contradiction, and why the annual figures for the two measures have converged at 4.7 percent. Producer disinflation to date has been an energy story. What remains is not.

BLS revised the March through June figures in this release to reflect late reports and corrections by respondents, so monthly comparisons against previously published tables will not tie out exactly.

What to Watch

The next Producer Price Index release covers August 2026. The line to isolate is final demand services less trade, transportation, and warehousing. If July's 0.6 percent proves to be portfolio management and retail margins rather than a broad services acceleration, it should fall back next month and the 4.7 percent annual rates keep converging downward. If it holds at or above 0.5 percent while energy keeps falling, the composition of producer inflation has shifted from goods to services — and services-side producer inflation feeds consumer prices with a longer lag and less reversibility than a gasoline swing does.