Wholesale Inflation Rises Significantly Higher Than Expected

(PPI) rose by 0.9% in July at the headline and core readings, well above the 0.2% gain expected on each. From a year ago, headline inflation rose 3.3% from 2.4% in the previous report, while core inflation rose 3.7% from 2.6% in the previous report.

What’s the bottom line?
It certainly appears that tariffs are finally showing up in wholesale inflation data. However, it’s important to blend July’s CPI and PPI data and consider that a lot of the tariff costs are being absorbed along the supply chain.

These PPI numbers matter as they influence the Fed’s preferred inflation gauge – the Personal Consumption Expenditures (PCE)index. The components that are shared between these reports were all fairly tame in July.