Wholesale inflation fell in July for the first time in two years despite the cost of goods remaining near multi-decade highs.

Thursday’s report from the U.S. Bureau of Labor Statistics showed that the producer price index (PPI), which measures wholesale level inflation before reaching consumers, declined 0.5% in July from the prior month. July’s PPI marks the first monthly decline since April 2020.

Although PPI fell 0.5% on a month-to-month basis, annually, it climbed 9.8% in July, per the report. These results were lower than economist estimates of .02% monthly and 10.4% yearly, respectively, according to a Reuters poll.

Rubeela Farooqi, the chief U.S. economist at High Frequency Economics, believes July’s decline in wholesale inflation is a step in the right direction. However, she says producer costs continue to rise rapidly and are well above the current target.

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Core inflation at the wholesale level, excluding food and energy, climbed 0.2% for the month and 5.8% for the year. That is 0.4% below expectations.

Headline inflation, which includes energy and food, showed mixed signals in July. The data showed a decline in the cost of energy, but a significant spike in food prices which saw their highest increase in four months, with the price of eggs soaring 41.3% in July.

Most of the decline in July came from the energy index, which fell 9% at the wholesale level. Gasoline prices fell by 16.7% and accounted for 80% of the total decline in the price of goods. This ultimately led to a drop of 1.8% in goods prices compared to a gain of 2.3% in June. The report also showed the prices of diesel fuel, liquefied petroleum gas, and residential natural gas declined sharply.

Some economists are taking the lower wholesaler costs as a signal that consumer prices will continue trending down.

“Cooling prices paid by producers portend a further cooling for consumer prices, as producer prices are further up the inflation pipelines,” said Jeffrey Roach, chief economist at LPL Financial. “We expect producer prices to ease as supply chains improve. It could take up to three months for improved supply chains to affect prices for the end consumer.”

Seema Shah, the chief global strategist at Principal Global Investors, believes prices could come down much sooner.

“Within a month or two, there will be clearer evidence that inflation has peaked, but also that the decline is painfully slow,” said Shah. “Households will, unfortunately, continue to feel the severe strain of elevated price pressures on their budgets, while wage growth persistence will take its toll on corporate profit margins.”