#HotJulyPPI
Headline (Final Demand) PPI rose 0.9% month-over-month in July — the largest advance since mid-2022 .
On a year-over-year basis, PPI climbed 3.3%, the fastest pace since February 2025 .
Final demand services jumped 1.1%—also the largest monthly rise since March 2022—and accounted for more than three-quarters of the overall increase. Strong gains came in areas like trade margins (up 2.0%), machinery/equipment wholesaling (up 3.8%), portfolio management, travel accommodations, and freight services .
Final demand goods rose 0.7%, again the largest gain since January 2025. Food prices surged 1.4%, led by a 38.9% jump in fresh and dry vegetables. Energy-related goods also climbed, while some items like gasoline fell 1.8% .
The "core" PPI (excluding food, energy, and trade services) also rose sharply by 0.6%, marking its largest monthly increase since March 2022. On a year-over-year basis, this core measure advanced 2.8% .
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What This Means
The July PPI print was much hotter than expected — economists had projected around a 0.2% increase, meaning this was a substantial upside surprise .
As a leading indicator of inflation, this spike suggests rising wholesale costs are likely to filter through to consumer prices, posing inflationary risks and complicating expectations of imminent Fed rate cuts .
Financial markets reacted swiftly—expectations for a September rate cut were dialed back, with markets losing confidence in a 50-basis-point move and now expecting a more modest adjustment .
Some of these price increases appear tied to tariff pass-throughs, with analysts noting that businesses are beginning to pass higher import costs on through pricing and margins