Prices for wholesale goods and services ticked up sharply in July, the latest warning that inflation could be coming for American consumers following President Donald Trump’s tariffs.
The producer price index, measured by the Bureau of Labor Statistics, rose 0.9% in July — the biggest monthly increase since June 2022 and higher than the 0.2% anticipated by experts.
The PPI tracks how selling prices change over time and can be a first indicator of rising inflation. July’s PPI figures came in as somewhat of an unpleasant surprise after a modest consumer price index increase earlier this week — which, at a 2.7% annual increase, was less than Wall Street had been expecting and made investors more optimistic for an interest rate cut from the Federal Reserve.
The substantial PPI increase indicates American producers are eating some of the costs of Trump’s tariff agenda for now. That could very well mean that price hike will be later passed along to U.S. consumers.
The White House said economic indicators were positive.
“The doom-and-gloom predictions of President Trump’s tariffs ratcheting up inflation continue to be proven flat-out wrong,” White House spokesperson Kush Desai said in a statement. “The Trump administration’s policies swiftly put an end to Joe Biden’s inflation crisis, and as trillions in investments pour into the United States, they’re now laying the groundwork for a long-term economic resurgence for the American people.”
Trump promised instant price relief on the campaign trail, telling voters that he would “immediately bring prices down, starting on Day 1,” while he was surrounded by a backdrop of groceries. He also criticized former President Joe Biden’s administration for rising costs.
Trump has suggested foreign countries will absorb the cost of his tariff agenda, which opponents have criticized for its anticipated impact on inflation. The reports so far, including PPI and lackluster jobs figures, have indicated hits may be coming to the economy.
Trump has tried to take steps like demanding an interest rate cut from Federal Reserve Chair Jerome Powell. But Powell has so far waited to see what the economic impact of the tariff policy is, prompting Trump’s on-and-off threats to fire him. Those threats, widely seen as an attempt to encroach on the central bank’s independence, have also resulted in negative market actions.
Stock futures dropped Thursday morning after the PPI figures were released. Other notable figures from the report include annual results: In the 12 months through July, PPI also went up 3.3%. It’s the biggest year-over-year increase in the past five months, and a sharp cut above the Federal Reserve’s target of 2% inflation.
The report said 40% of the increase in July for final demand goods “can be attributed to the index for final demand foods.” A quarter of that could be traced to the price of fresh and dry vegetables, which rose a staggering 38.9%.
The less-than-ideal PPI report comes after the president fired the former BLS chief following lackluster jobs numbers Trump suggested were “rigged.” (There is no evidence the figures were manipulated.) Economists have said the firing threatens trust in the gold-standard economic data from the federal government. Trump’s subsequent nominee, E.J. Antoni, has said he wants to kill the monthly jobs report.
This story has been updated with a comment from the White House.