In July 2025, wholesale prices in the United States jumped more than anyone expected, signaling that inflation might still be a problem. The latest data from the Bureau of Labor Statistics showed that the Producer Price Index (PPI), which tracks the prices that businesses pay for goods and services, increased by 0.9% in just one month. Experts had predicted only a 0.2% rise, so this was a major surprise.
This monthly increase was the largest since June 2022. Even when we remove the more volatile prices like food and energy, the core PPI still rose by 0.9%, which was three times more than expected. If you take out food, energy, and trade services, the index was up 0.6% — another sign that inflation might be sticking around longer than hoped.
Looking at the bigger picture, wholesale prices are now 3.3% higher than they were a year ago. That’s well above the 2% inflation target that the Federal Reserve generally aims for. The biggest driver behind July’s increase came from the service sector, which saw prices go up by 1.1%. This includes trade services, which rose 2%, likely linked to the ongoing implementation of tariffs by President Donald Trump.
Interestingly, a big chunk of the increase in service prices — about 30% — came from the wholesaling of machinery and equipment, which went up by 3.8%. On top of that, fees for portfolio management surged by 5.4%, and prices for airline passenger services increased by 1%.
The financial markets didn’t take this news lightly. Stock futures dropped after the report was released, and bond yields for shorter-term Treasury notes moved higher. That’s because investors worry that rising inflation could delay or reduce the chance of interest rate cuts by the Federal Reserve.
Even though the Consumer Price Index (CPI) earlier this week was more stable, this PPI report tells a different story. It’s a reminder that inflation may still be a threat, even if consumers aren’t feeling it directly yet. PPI data often serves as an early warning for broader inflation trends because it reflects the prices businesses pay before goods and services reach consumers.
Before this report, the market had been almost certain that the Federal Reserve would lower interest rates at its meeting in September. But after seeing these numbers, the chances of a rate cut have slightly decreased, and now, fewer investors believe there will be multiple cuts this year.
Meanwhile, the U.S. government noted that despite the PPI jump, businesses don’t appear to be passing their higher costs on to consumers — at least not yet. That’s one reason why the CPI has remained relatively calm.
However, there are growing concerns about the accuracy of economic data. Recently, President Trump dismissed the former head of the Bureau of Labor Statistics and plans to appoint a new leader who has criticized how the data is collected. Due to budget cuts and layoffs, the bureau has changed the way it gathers information. In fact, the July report was the first one after they removed 350 data categories to simplify their process.
All in all, the unexpected jump in wholesale prices is a warning sign. Even if consumer prices remain steady for now, inflation might be building up again, especially behind the scenes in the supply chain. Investors, businesses, and policymakers will be watching closely in the coming weeks to see whether this is a one-time jump or the beginning of a new trend.
