July PPI: U.S. wholesale prices rose 0.9%, much more than expected

Aug. 14 (UPI) — The threat of inflation to the U.S. economy may be looming after a Bureau of Labor Statistics report Thursday showed a jump in wholesale prices

The Producer Price Index for final demand rose a seasonally adjusted 0.9% in July, a surge absent in June when such prices stayed flat after having risen only 0.4% in May.

Even more noticeable is the index for the total of final demand prices without adjustment, which saw a 3.3% increase for the 12 months ending in July, the largest 12-month upswing since rising 3.4% in February.

Within the final demand spectrum, three-quarters of the advance comes from the index for final demand services, such as transportation and warehousing, which rose 1.1%, the largest such advance since rising to 1.3% in March of 2022.

Prices for final demand goods increased 0.7% when measured with the inclusion of foods, energy, and trade services. Without those items, the rise is just a slightly smaller 0.6%, the largest increase since a 0.9% leap that also took place in March of 2022.

The index for final demand services also rose, moving 1.1% up in July, the biggest jump since that clearly rough fiscal month of March in 2022, when such services rose 1.3%.

A deeper dive into the price windup showed 30% of the July jump in final demand services is due to the margins for machinery and equipment wholesaling, which increased 3.8%. Additionally, 40% of the broad-based increase in July can be credited to the index for final demand foods, up 1.4%, and among the foods, prices for fresh and dry vegetables soared a whopping 38.9% percent.

Another major player in the overall July increase comes from the diesel fuel index, which ascended 11.8% and is responsible for more than 50% of the month’s increase in prices for processed goods for intermediate demand. The index for raw milk moved up 9.1%, accountable for more than 30% of the July increase in prices for unprocessed goods for intermediate demand.

The Producer Price Index’s data includes key details on overall prices, and is combined with information taken from the Consumer Price Index to fill out the Commerce Department’s personal consumption expenditures price index, the government’s chief inflation forecasting scale.

The Consumer Price Index had only ticked upwards a seasonally adjusted 0.2% in July and 2.7% on a 12-month basis, a bit less than of an impact than expected with the Trump administration’s tariffs in action.