U.S. wholesale inflation surged unexpectedly last month, signaling that President Donald Trump’s sweeping taxes on imports are pushing costs higher.
The Labor Department reported Thursday that its producer price index — which measures inflation before it hits consumers — was up 0.9% last month from June and 3.3% from a year earlier.
The numbers were much higher than economists had expected.
The wholesale inflation report two days after the Labor Department reported that consumer prices rose 2.7% last month from July 2024, same as the previous month and up from a post-pandemic low of 2.3% in April. Core consumer prices rose 3.1%, up from 2.9% in June. Both figures are above the Federal Reserve’s 2% target.
The new numbers suggest that slowing rent increases and cheaper gas are at least partly offsetting the impacts of Trump’s tariffs. Many businesses are also likely still absorbing much of the cost of the duties instead of passing them along to customers via higher prices.
Wholesale prices can offer an early look at where consumer inflation might be headed. Economists also watch it because some of its components, notably measures of health care and financial services, flow into the Federal Reserve’s preferred inflation gauge — the personal consumption expenditures, or PCE, index.
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