U.S. wholesale inflation accelerated sharply in July, with the Producer Price Index (PPI) for final demand rising 3.3% over the past year, the fastest annual pace since February, according to the Bureau of Labor Statistics (BLS report).
On a monthly basis, the PPI rose 0.9%, the largest one-month increase since May 2022. The gain was driven by broad-based cost increases for both goods and services.
Breakdown of July Price Gains
Final Demand Services rose 1.1%, the strongest advance since March 2022, led by higher trade margins for machinery and equipment wholesalers (+3.8%) and a 2.0% overall jump in trade services.
Final Demand Goods increased 0.7%, fueled by a 1.4% rise in food prices. Fresh and dry vegetables surged 38.9%, with additional increases for meats, diesel fuel, jet fuel, and nonferrous scrap. Gasoline prices, however, fell 1.8%.
The core PPI—which excludes food, energy, and trade services—climbed 0.6% in July, the largest monthly gain since March 2022, and is up 2.8% over the past year.
Economic Implications
The jump in wholesale prices raises concerns about future consumer inflation, as rising costs for producers often filter down to shoppers. The report may also influence Federal Reserve policymakers as they weigh the timing of potential interest rate adjustments.
