Producer Inflation Explodes In July As Trump Tariffs Feed Through (UPDATED)

Zinger Key Points

• U.S. PPI surged 0.9% in July, its largest monthly jump since 2022, far exceeding forecasts and fueled by Trump’s tariff hikes.
• Final demand services rose 1.1%, the sharpest gain in over two years, with machinery and equipment margins jumping 3.8%.

Editor’s Note: This article has been updated to include additional context.

U.S. producer prices exploded in July, signaling that President Donald Trump‘s tariff hikes are feeding through the supply chain before hitting consumer store shelves.

The Producer Price Index (PPI) jumped 0.9% month-over-month, up from June’s flat reading and well above the 0.2% increase economists had forecast. The outcome marks the largest monthly increase since June 2022.

On an annual basis, headline PPI soared from 2.4% in June to 3.3% in July, sharply outpacing expectations of 2.5%.

Every major component of the PPI basket rose in July, led by food (+1.4%) and transportation and warehousing (+1.0%), which posted the sharpest monthly gains.

Core PPI — which strips out volatile food and energy costs — climbed 0.9% on the month, rebounding sharply from zero growth in June and smashing the expected 0.2% rise. The reading marks the largest monthly increase since March 2022.

Year over year, core PPI accelerated from 2.6% to 3.7%, topping estimates of 2.9%.

According to Clark Geranen, chief market strategist, CalBay Investments, “businesses are eating much of the tariff costs instead of passing them onto the consumer,” which explains why July’s PPI ran far hotter than consumer inflation.

However, he expects this to change soon, with producers likely to push more of the price increases onto shoppers.

More than three-quarters of July’s broad-based PPI increase came from a 1.1% jump in the index for final demand services — the largest monthly gain since March 2022’s 1.3% rise. Prices for final demand goods also climbed 0.7%.

Roughly 30% of the July surge in final demand services reflected a 3.8% spike in margins for machinery and equipment wholesaling.

In a separate release, weekly jobless claims fell by 3,000 to 224,000 in the first week of July, defying expectations for a rise to 228,000.

Money markets continue to fully price a 25-basis-point rate cut by the Federal Reserve next month, according to CME FedWatch tool.

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Originally Posted August 14, 2025 – Producer Inflation Explodes In July As Trump Tariffs Feed Through (UPDATED)