Wholesale prices in the US cooled in July, offering a welcome sign that inflation may be losing some momentum as lower energy costs helped ease price pressures.Data released by the labor department showed that the producer price index (PPI), which tracks prices received by producers before they reach consumers, increased 4.7% from a year earlier in July. That marked a decline from the 5.5% annual rise recorded in June. Compared with the previous month, wholesale prices were flat, following a 0.1% fall in June.The moderation in producer prices came a day after government figures showed a modest cooling in consumer inflation as well. Despite that, household budgets remain under pressure, with consumer prices continuing to rise faster than wages for the fourth straight month. Higher costs for essentials, including rent and utilities, could weigh on spending if incomes fail to keep pace.Underlying price pressures also softened during the month. Excluding food and energy, core wholesale inflation eased to 4.2% year-on-year in July from 4.7% in June. On a monthly basis, core prices rose 0.2%, slower than the 0.4% increase recorded between May and June.The decline in inflation was aided by lower fuel costs earlier in July, when gas prices retreated after surging during the Iran war. However, fuel prices moved higher again later in the month and into early August, creating uncertainty over whether inflation could accelerate in the next set of data.“The soft (producer prices) reading for July points to reduced inflationary pressure for businesses in coming months,” said Ben Ayers, senior economist at Nationwide. “While the renewed rise in fuel costs is concerning, input costs beyond energy are cooling.”The latest figures are likely to feature in discussions at the Federal Reserve ahead of its September policy meeting. Officials have so far left interest rates unchanged this year and are weighing whether inflation is easing enough to avoid further rate increases.Economists closely track producer prices because some components, particularly healthcare and financial services, feed into the personal consumption expenditures (PCE) index, the inflation measure preferred by the Fed. The PCE report is due in about two weeks.Based on the consumer and producer inflation reports released so far, economists expect core PCE inflation to remain at around 3.3% in July when the data is published on August 26. That would suggest inflation remains above the Fed’s 2% target even as other measures show some easing.At the same time, signs of a softer labour market are adding another factor to the Fed’s deliberations. Government data released last week showed employers cut jobs in July, pointing to economic weakness that could reduce the case for higher borrowing costs.