Originally Published: 13 JUL 23 08:33 ET

Updated: 13 JUL 23 09:35 ET

By Alicia Wallace, CNN

Minneapolis (CNN) — Wholesale inflation continued its yearlong slowdown last month, rising by just 0.1% for the 12 months ended in June, according to the Bureau of Labor Statistics’ Producer Price Index released Thursday.

The PPI index, a key inflation gauge that tracks the average change in prices that businesses pay to suppliers, has cooled significantly since peaking at 11.2% in June 2022 and has now declined for 12 consecutive months. Annual producer price inflation is at its lowest level since August 2020, BLS data shows.

Economists were expecting an annual increase of 0.4%, according to Refinitiv.

Goods prices held steady for the month, after tumbling 1.6% in May, according to the BLS report. As such, prices for services — which increased 0.2% from May — were the primary driver behind June’s slight increase.

PPI is a closely watched inflation gauge since it captures average price shifts before they reach consumers and is a proxy for potential price changes in stores.

On a monthly basis, prices increased by 0.1%.

When stripping out the more volatile categories of food and energy, core PPI showed a cooling as well — albeit more muted. Core PPI rose 2.4% for the 12 months ended in June, a step down from the 2.6% increase seen in May and economists’ expectations of 2.6%.

Core PPI also increased 0.1% month on month.

“Producer prices rose slightly less than expected in June, while the prior two months were revised lower as well,” Oxford Economics economists wrote Thursday in a note. “The immediate monetary policy implications are minimal as the [Federal Reserve] is very likely to press ahead with plans to raise rates at the July FOMC meeting. However, together with yesterday’s [Consumer Price Index] release, the report adds weight to our view that will prove to be the last hike this cycle.”

In June, inflation as measured by the CPI cooled to 3% annually, its lowest rate since March 2021, the BLS reported Wednesday.

Starting in March 2022, the central bank rolled out 10 consecutive interest rate hikes to tame inflation, finally hitting pause last month. The Fed is widely expected to raise rates by another quarter point when it meets later this month.

This story is developing and will be updated.