The producer price index (PPI) rose by more than 0.9 percent last month, the biggest increase since June 2022.
Wholesale prices — the prices at which manufacturers or suppliers sell goods in bulk to retailers instead of individuals — rose more than expected in July, according to a Bureau of Labor Statistics (BLS) report.
The PPI rose by 0.9 percent, which far exceeds the Dow Jones 0.2 percent estimate.
Excluding food and energy prices, core PPI rose by 0.9 percent against the expected 0.3 percent. The index also rose by 0.6 percent when excluding food, energy, and trade services.
On annualized basis, headline PPI increased by 3.3 percent, which is the largest one-year move since February.
CNBC reported:
Services inflation provided much of the push higher, rising 1.1% in July for the largest gain also since March 2022. Trade services margins climbed 2%, coming amid ongoing developments in President Donald Trump’s tariff implementations.
In addition, 30% of the increase in services came from a 3.8% rise in machinery and equipment wholesaling. Also, portfolio management fees surged 5.4% and airline passenger services prices climbed 1%.
Chris Zaccarelli, chief investment officer at Northlight Asset Management, wrote, “The large spike in the Producer Price Index this morning shows inflation is coursing through the economy, even if it hasn’t been felt by consumers yet.
He added, “Given how benign the CPI numbers were on Tuesday, this is a most unwelcome surprise to the upside and is likely to unwind some of the optimism of a ‘guaranteed’ rate cut next month.”
PPI is a less relevant indicator of prices compared to the BLS’s consumer price index (CPI).
The BLS found that the Consumer Price Index (CPI) increased by a seasonally adjusted 0.2 percent in July and 2.7 percent on an annualized basis, according to the Bureau of Labor Statistics (BLS).
“Today’s CPI report revealed that inflation beat market expectations once again and remains stable, underscoring President Trump’s commitment to lower costs for American families and businesses,” White House press secretary Karoline Leavitt said in a statement on Tuesday.
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