Energy Supplied 93% of June PPI's Downward Pull

Energy supplied almost all of the downward pressure, but more than all of the final net decline. The final-demand index fell from 157.001 in May to 156.566 in June. That is an exact decrease of 0.277%, which rounds to the 0.3% reported by BLS. https://www.bls.gov/news.release/ppi.nr0.htm https://www.bls.gov/news.release/ppi.t03.htm

Our public-data reconstruction estimates that energy subtracted 0.403 percentage points. Food subtracted another 0.031 points. Energy therefore accounted for 92.9% of the combined downward pull from the two broad buckets that fell. https://www.bls.gov/news.release/ppi.t01.htm https://www.bls.gov/news.release/ppi.t03.htm

Energy's estimated drag was about 146% of the final net decline because other prices moved in the opposite direction. Core goodsCore goodsFinal-demand goods other than food and energy. https://www.bls.gov/news.release/ppi.t01.htm, trade margins, other services and construction together added about 0.176 percentage points. Think of a tug-of-war: energy pulled the index down farther than it ultimately moved because four other categories pulled upward. https://www.bls.gov/news.release/ppi.t01.htm https://www.bls.gov/news.release/ppi.t03.htm

We divided final demandfinal demandGoods, services and construction sold for personal consumption, capital investment, government use or export rather than for another domestic production stage. https://www.bls.gov/news.release/archives/ppi_02272026.htm into six non-overlapping buckets: food, energy, goods excluding food and energy, trade servicestrade servicesWholesale and retail activity measured through sellers' margins rather than the prices of the merchandise itself. https://www.bls.gov/news.release/ppi.t01.htm, services excluding trade, and construction. Together they cover the goods, services and construction sold for consumption, capital investment, government use and export. https://www.bls.gov/news.release/archives/ppi_02272026.htm https://www.bls.gov/news.release/ppi.t01.htm

BLS publishes each category's December 2025 relative importancerelative importanceA category's estimated weight in a larger index after accounting for its economic value and subsequent price movement. https://www.bls.gov/opub/hom/ppi/calculation.htm, which is its weight in the final-demand index. Because energy prices rose sharply between December and May, simply using December's weight would understate energy's importance immediately before the June decline. We therefore updated each weight by the category's December-to-May index change and normalized the results to 100. BLS describes relative importance as an updated value weight that reflects relative price movement. https://www.bls.gov/news.release/ppi.t01.htm https://www.bls.gov/news.release/archives/ppi_02272026.htm https://www.bls.gov/opub/hom/ppi/calculation.htm

• Food: 5.326% of the reconstructed May basket.
• Energy: 6.301%.
• Core goods: 18.380%.
• Trade services: 19.423%.
• Other services: 47.993%.
• Construction: 2.578%.

The exact May-to-June changes calculated from published index levels were -0.580776% for food, -6.397969% for energy, 0.190661% for core goods, 0.442459% for trade services, 0.110858% for other services and 0.089176% for construction. Multiplying each change by its reconstructed May weight produces the contribution estimates in the lead chart. https://www.bls.gov/news.release/ppi.t03.htm

The six estimates sum to -0.257594 percentage points, short of the official -0.277068% change by -0.019474 points. We show that reconciliation gapreconciliation gapThe difference between the official aggregate change and a reconstruction made from published weights and rounded index levels. rather than quietly assigning it to another category. https://www.bls.gov/news.release/ppi.t03.htm

A perfect reconstruction is not possible from these aggregate tables. BLS uses direct and indirect seasonal adjustmentindirect seasonal adjustmentConstructing an adjusted aggregate by combining components that were seasonally adjusted separately. https://www.bls.gov/opub/hom/ppi/calculation.htm, publishes index levels to three decimal places and rounds displayed monthly changes to one decimal place. Those features can keep independently updated components from adding exactly to the aggregate. https://www.bls.gov/opub/hom/ppi/calculation.htm

The 92.9% estimate is not dependent on a single set of weights. Using the published December weights directly with BLS's rounded monthly changes makes energy 90.8% of the downward pull from energy and food. Using the same December weights with exact changes calculated from index levels produces 91.1%. The defensible summary is therefore that energy supplied roughly nine-tenths of the gross downward pressure. https://www.bls.gov/news.release/ppi.t01.htm https://www.bls.gov/news.release/ppi.t03.htm

At a more detailed level, June was close to evenly split. Among 19 mutually exclusive final-demand subcategories, 9 rose, 8 fell and 2 were unchanged at BLS's published one-decimal precision. Giving an unchanged category half credit produces an unweighted diffusion indexdiffusion indexA breadth measure in which a reading of 50 means increases and decreases are balanced, with unchanged categories receiving half weight. of 52.6, only slightly above the neutral reading of 50. The medianmedianThe middle value after all observations are arranged from lowest to highest. category change was 0.0%. https://www.bls.gov/news.release/ppi.t01.htm

Weighting those same categories by their December 2025 relative importance produces a much stronger reading of 83.8 because large service categories rose. Collapsing the data into the six broad buckets produces 66.7 because four increased and two decreased. The disagreement is informative: June's headline decline was concentrated, but it is too strong to say that prices rose almost nowhere. https://www.bls.gov/news.release/ppi.t01.htm

The final-demand energy index rose from 136.245 in February to 174.868 in May, a cumulative increase of 28.3%. It then fell to 163.680 in June. Even after June's 6.4% monthly drop, the energy index remained 20.1% above February. https://www.bls.gov/news.release/ppi.nr0.htm https://www.bls.gov/news.release/ppi.t03.htm

BLS said gasoline prices fell 12.0% in June and accounted for nearly two-thirds of the decline in final-demand goods. Diesel fuel, jet fuel and crude petroleum also became cheaper, while residential electric power increased. These are movements within the energy story, not evidence that every producer's energy cost fell by the same amount. https://www.bls.gov/news.release/ppi.nr0.htm

The clean-core PPIclean-core PPIThe final-demand PPI excluding food, energy and trade services. https://www.bls.gov/news.release/ppi.nr0.htm, which excludes food, energy and trade services, rose 0.1% in June after rising 0.8% in May. That is slower monthly growth, but the index still increased from 140.434 in March to 142.490 in June, an unannualized three-month rise of 1.46%. https://www.bls.gov/news.release/ppi.nr0.htm https://www.bls.gov/news.release/ppi.t03.htm

Over the same March-to-June period, headline final-demand PPI rose 1.40%, the index excluding food and energy rose 0.99%, and final-demand services rose 0.85%. These cumulative increases explain why one energy-led monthly decline is not enough to establish a sustained change in the broader price trend. https://www.bls.gov/news.release/ppi.t03.htm

PPI measures prices received by producers, not the prices households directly pay. The PCE price index is built from detailed components and aggregated with a Fisher chain-weighted formulaFisher chain-weighted formulaA method that combines price changes using weights from adjacent periods so the measured spending mix can evolve. https://www.bea.gov/index.php/help/faq/521. BEA says most PCE price indexes are derived by extending consumer or producer price indexes, so PPI is one input into the household-inflation picture rather than a mechanical forecast of the next PCE reading. https://www.bls.gov/opub/hom/ppi/calculation.htm https://www.bea.gov/index.php/help/faq/521

The distinction matters here. June's energy decline is an observed producer-price movement. Whether and how it reaches household prices depends on which products are involved, where they sit in supply chains and what happens to margins and other costs. This analysis measures the first movement; it does not claim the second as a demonstrated economic effect. https://www.bls.gov/news.release/ppi.nr0.htm https://www.bea.gov/index.php/help/faq/521