The latest released inflation indicator PPI is explosive, both soaring by 1% compared to the previous value, jumping from a normal 2.6% to a high inflation 3.7%. Old Powell must have seen his blood pressure spike, and he might even consider raising interest rates;

What is even more concerning is that inflation may continue to soar next month, as this data released is for July, while Trump's aggressive tariffs started in August, so the next data might also increase, and the probability of this happening is not low.

Some might wonder, why was the CPI quite stable on Tuesday, but the PPI exploded on Thursday?

To clarify, PPI is the Producer Price Index, while CPI is the Consumer Price Index. Therefore, PPI is a leading indicator, while CPI is a lagging indicator. First, the production costs reflected in PPI rise, leading to an increase in commodity prices, which then transmits to the consumer side, resulting in a rise in CPI. Thus, PPI, as the upstream production side, is more sensitive, and its inflation will gradually transmit to the downstream consumer side CPI. Therefore, the rise in CPI in the coming months seems to be a high probability event.