Excluding food and energy prices, core PPI rose 0.9% against the forecast for 0.3%. Excluding food, energy and trade services, the index was up 0.6%, the biggest gain since March 2022.
The producer price index , which measures final demand goods and services prices, jumped 0.9% on the month, compared with the Dow Jones estimate for a 0.2% gain. It was the biggest monthly increase since June 2022.
Wholesale prices rose far more than expected in July, providing a potential sign that inflation is still a threat to the U.S. economy, a Bureau of Labor Statistics report Thursday showed.
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%.
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.
On an annual basis, headline PPI increased 3.3%, the biggest 12-month move since February and well above the Federal Reserve's 2% inflation target.
Stock market futures fell following the release, while shorter-duration Treasury yields moved higher.
Though PPI is followed less closely than the BLS' consumer price index, it provides important information on pipeline prices. Together, the measures feed into the Commerce Department's personal consumption expenditures price index, the Fed's primary inflation forecasting gauge, which will be updated later this month.
"The fact that PPI was stronger-than-expected and CPI has been relatively soft suggests that businesses are eating much of the tariff costs instead of passing them onto the consumer," said Clark Geranen, chief market strategist at CalBay Investments. "Businesses may soon start to reverse course and start passing these costs to consumers."
With CPI coming in right around expectations earlier this week, markets had been pricing a virtual certainty that the Fed will lower its key interest rate when it meets next in September. Following the release, market-implied odds of a September cut decreased but only slightly, according to the CME Group's FedWatch tool. Traders did substantially lower the probability for three cuts this year.
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