KEY POINTS
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Consumer prices fell 0.4% in June, while wholesale prices dropped 0.3%, showing broader inflation cooled more than expected.
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Core inflation also eased, suggesting the earlier fuel-price spike had not yet spread widely across the economy.
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We continue to watch interest rates, fuel costs, and whether Middle East conflict pushes energy and materials prices higher again.
The U.S. Bureau of Labor Statistics (BLS) said yesterday that the Consumer Price Index (CPI) fell 0.4% from May to June, the biggest monthly drop in four years, after a 0.5% increase the previous month.
Year over year, inflation slowed to 3.5% from 4.2% in May. Excluding food and energy, core consumer prices were unchanged on the month and up 2.6% from a year earlier.
Today, the BLS said its Producer Price Index (PPI), which tracks inflation before it reaches consumers, fell 0.3% in June from May. Additionally, wholesale prices rose 5.5% compared to a year earlier, down from 6% in May. Core wholesale prices increased 0.2% on the month and 4.7% from June 2025.
Energy Drove Much of the Cooling
Lower energy prices were a major reason both reports improved. Gasoline prices plunged 12% in June at the wholesale level, and electricity prices fell 1% from May to June, though power costs were still 4% higher than a year earlier.
That matters for construction because fuel and power costs influence transportation, manufacturing, and jobsite overhead.
Still, the outlook remains fragile. Oil prices rose after the United States renewed attacks on Iran and President Donald Trump announced a new blockade in the Strait of Hormuz, a major global oil shipping route. When the conflict began earlier this year, oil prices jumped 88% from February to March, showing how disruptions in the region can affect fuel prices.
If energy prices continue to climb, contractors could face renewed pressure on diesel, asphalt, freight, and other petroleum-linked costs.
In a related story, ConstructConnect reported last week that the Project Stress Index™ (PSI) rose in June, as abandoned and on-hold projects increased. The renewed disruptions in shipping through the Strait of Hormuz could be pushing projects toward that stress, as energy and material prices remain at risk of climbing further.
What It Means for Construction
The inflation reports, while improved from recent releases, continue to offer a murky picture for interest rates in the near term. The improvement likely staves off chances of an interest rate hike from the Federal Reserve, but the continued potential for higher energy prices and inflation could make cutting rates difficult.
That leaves the construction market with a mixed signal. June brought a welcome cooling in headline inflation, but the next phase will likely depend on oil markets, Fed policy, and whether energy-driven price pressure keeps building.
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