Another view ...
... Summary
- - - Producer price index jumps 0.9% in July
- - - Strong increase in both services and goods
- - - BLS ends calculation of 350 indexes due to underfunding
- - - Economists expect tariffs to drive up inflation soon
- - - Weekly jobless claims fall 3,000 to 224,000
"This is a kick in the teeth for anyone who thought that tariffs would not impact domestic prices in the United States economy," said Carl Weinberg, chief economist at High Frequency Economics. "This report is a strong validation of the Fed's wait-and-see stance on policy changes." ...
Goods prices vaulted 0.7%, the biggest gain since January, after climbing 0.3% in June. A 1.4% surge in food prices accounted for 40% of the broad increase in the cost of goods.
Food prices were driven by a 38.9% acceleration in the cost of fresh and dry vegetables. There were also increases in the prices of meat and eggs. Excluding food and energy, goods prices increased 0.4%, with strong rises in the costs of steel, aluminum and primary nonferrous metals.
Services prices soared 1.1%, the largest gain since March 2022, amid strong increases in machinery and equipment wholesaling, and costs of portfolio management, hotels and motels, and road transportation of freight.
In the 12 months through July, the PPI increased 3.3% after advancing 2.4% in June.
"While businesses have assumed the majority of tariff costs increases so far, margins are being increasingly squeezed by higher costs for imported goods," said Ben Ayers, senior economist at Nationwide. "We expect a stronger pass-through of levies into consumer prices in coming months with inflation likely to climb modestly over the second half of 2025." ...
