Wholesale prices rose 0.9% in July, much more than expected

Authors: Jeff Cox

Publisher:

CNBC

Published: 8/14/2025

Language:English

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Aura Windfall

Good morning norristong_x, I'm Aura Windfall, and this is Goose Pod for you. Today is Monday, August 25th. We're here to explore the truth behind the numbers and what they mean for our collective spirit. And with me is...

Mask

I'm Mask. We're not here for feelings, we're here for facts. And the fact is, wholesale prices just exploded. A 0.9% jump in July, completely blowing past all expectations. The market is reacting, and the game is changing. Let's get into it.

Aura Windfall

Let's get started. That number, 0.9%, feels so clinical, but what I know for sure is that behind every percentage point is a human story. This is the fastest increase we've seen since March 2022. What does this signal to the everyday person, norristong_x?

Mask

It signals that the inflation monster isn't dead; it was just sleeping. While consumers haven't been fully hit yet, this is the pipeline. It's the pressure building before the dam breaks. This is tariff pass-through bleeding into the domestic economy, plain and simple. Action is required.

Aura Windfall

And that action, or inaction, from the Federal Reserve is what everyone is watching. There was so much hope, so much certainty around a rate cut in September. It felt like a collective exhale was coming. But this data seems to have shifted that energy, hasn't it?

Mask

Hope doesn't drive markets; data does. Bank of America has already flipped. They're now calling for rates to hold. The market was pricing in a September cut as a near-guarantee, some were even talking about a larger cut. This PPI data just poured a bucket of ice water on that party.

Aura Windfall

It's fascinating how one report can cause such a profound reassessment. It sounds like the optimism was built on a foundation that wasn't as solid as we thought. It reminds me of building a house on sand, a powerful lesson in ensuring our foundations are rooted in truth.

Mask

It's not about truth, it's about information. The market had a shock jobs report suggesting weakness, so it bet on a cut. Now it has a shock inflation report suggesting strength, so the bet is changing. Investors still see an 85% chance of a cut, but the conviction is shaken.

Aura Windfall

So, there's still a belief in relief, but with a newfound sense of caution. This tension between hope and data is where so much of our economic story unfolds. It feels like we're all holding our breath, waiting for a clear sign of which path we're truly on.

Mask

Forget holding your breath. The sign is here. It says "WARNING: STICKY INFLATION." The Fed now has the cover it needs to keep policy tighter for longer. Anyone who was betting on easy money flowing freely again just had their strategy disrupted. That's the game. You adapt or you lose.

Aura Windfall

And that adaptation is key, not just for investors but for everyone. How do we find our center, our purpose, when the ground beneath us is constantly shifting? This report is more than numbers; it's a call to be present, to be aware, and to be prepared for what's next.

Aura Windfall

To truly understand this moment, I feel we need to step back. For norristong_x, who might not follow these numbers daily, can we illuminate the landscape? What exactly is inflation, and why is the Federal Reserve, this powerful entity, so focused on a 2% target? It feels so specific.

Mask

It's a control mechanism. Inflation is the rate at which money loses its value. Your dollar buys you less today than it did yesterday. The Fed's job is to keep that erosion predictable and slow. They set a 2% target as the sweet spot—enough to encourage spending but not enough to cause chaos.

Aura Windfall

So it’s about creating a stable economic environment where people can plan their lives with a sense of security. And to do that, they need the most accurate, up-to-the-minute information possible. I heard about something called "nowcasting" at the Cleveland Fed. It sounds like a way to find clarity in the now.

Mask

"Nowcasting" is just a fancy term for real-time estimates. Official data is slow. The CPI report for July comes out in mid-August. Nowcasting uses daily and weekly data, like oil and gas prices, to build a projection before the official numbers drop. It gives a critical edge.

Aura Windfall

An edge born from a desire to understand the present moment more deeply. I love that. It acknowledges that the economy isn't just a historical record; it's a living, breathing thing. And what they've found is that these nowcasts are often more accurate than traditional forecasts, which is incredible.

Mask

Of course they are. They use more current data. It's not magic, it's just better inputs. They track everything from CPI components to the price of Brent crude oil to get a precise, daily snapshot. In a volatile market, having that data first is the only thing that matters.

Aura Windfall

But this volatility, this battle with high inflation, isn't new. What I know for sure is that history holds powerful lessons. I'm thinking of the "Great Inflation" from 1965 to 1982. It was a period that redefined our entire understanding of the economy, wasn't it?

Mask

It was a complete failure of macroeconomic policy. They started with inflation at 1% and ended with it screaming past 14%. The core cause? The Fed printed too much money. They were chasing a flawed theory called the Phillips Curve, believing they could trade a little inflation for less unemployment.

Aura Windfall

They were trying to achieve a noble goal—maximum employment—but the path they chose led to unintended consequences. It's a powerful reminder that our intentions must be aligned with wisdom and a true understanding of the systems we're a part of. The outcome was "stagflation," a truly difficult experience for people.

Mask

"Stagflation" was the consequence of their hubris. High inflation *and* high unemployment. They got the worst of both worlds. The system was already strained by spending on the Vietnam War and social programs, and then two massive oil shocks in the '70s just threw gasoline on the fire.

Aura Windfall

And it took a significant shift in consciousness and leadership to conquer it. Paul Volcker's appointment to the Fed marked a turning point. He had to make some incredibly tough decisions that caused short-term pain, like recessions, to achieve long-term stability and tame inflation. It was a courageous path.

Mask

He did what had to be done. Volcker stopped targeting interest rates and went straight for the source: the money supply. He crushed it. He drove the economy into a recession to break the inflation cycle. It was brutal, but it worked. He restored the Fed's credibility and set the stage for decades of growth.

Aura Windfall

That brings us back to the importance of data and, more importantly, our trust in it. If we can't believe the numbers we're given, how can we make sound decisions? There seems to be a growing conflict around the very source of this data, the Bureau of Labor Statistics.

Mask

The BLS is a mess. Trump's nominee to lead it, E.J. Antoni, is absolutely right. Their data has been wildly inaccurate, especially the monthly jobs reports. They're constantly making massive downward revisions. It's like trying to navigate a battleship with a broken compass. It needs to be torn down and rebuilt.

Aura Windfall

Torn down? That sounds so disruptive. What I hear underneath that is a call for greater accuracy and integrity. But Antoni has suggested suspending the monthly jobs report entirely. For so many, that report is a vital sign of our nation's economic health. Wouldn't its absence create even more uncertainty?

Mask

Bad data is worse than no data. He says the monthly report is "unreliable and frequently overstated." It misleads businesses, it misleads the Fed. He's proposing they stick to the more accurate quarterly data until they fix the system. It's a bold move, and it's the right one. You can't build a strategy on lies.

Aura Windfall

But the word "lies" is so charged. These are dedicated public servants trying to capture the picture of a vast, complex economy. Antoni himself said, "Major decision-makers from Wall Street to D.C. rely on these numbers." A lack of confidence has such far-reaching consequences for everyone. It creates fear.

Mask

Fear is a motivator. The previous BLS commissioner was fired after releasing a weak jobs report with huge negative revisions. That's a consequence. Now, there's a push for a "top to bottom" review. The White House is trying to calm the markets, saying they won't stop the report, but the message is clear: the status quo is broken.

Aura Windfall

I wonder, though, if the goal is to repair the system or to control the narrative. When we politicize our sources of data, we risk losing a shared sense of reality. The purpose of this data is to illuminate, not to be wielded as a weapon. We must protect that purpose.

Mask

The system is already politicized. Antoni's criticism is that the "Biden-Harris Labor Department seems to exist in the land of make-believe." This isn't about gentle reform; it's about reclaiming reality. You can't fix a problem until you admit you have one, and the BLS has a massive data problem.

Aura Windfall

Let's bring this back to the ripple effects of this single PPI report. Beyond the Fed's next move, what was the immediate impact? How did this unexpected news land in the hearts and minds of the market, which is, after all, a collection of human decisions and emotions?

Mask

The market flinched. Stock futures fell, and short-term Treasury yields moved higher. It was a classic risk-off reaction. The possibility of a big, aggressive 50-basis-point rate cut in September? That was immediately crushed. Matt Weller at StoneX said this PPI report "quashes that" idea entirely. The easy money party is over.

Aura Windfall

So it tempered expectations. It brought a dose of reality to the conversation. I find it interesting that St. Louis Fed President Alberto Musalem said a half-point cut isn't warranted right now. He's pointing to near full employment and businesses still adapting. It's a holistic view.

Mask

It's the correct view. The economy is not in freefall. Cutting rates aggressively would be an act of panic, not strategy. This data gives the Fed justification to stay the course. The primary focus now shifts to the labor market. This PPI report was hot, but not catastrophic enough to force an immediate pivot.

Aura Windfall

And all of these different data points—PPI, CPI, the jobs numbers—they all flow into one primary river, the Personal Consumption Expenditures, or PCE, index. What I know for sure is that understanding how these streams connect is key. This PPI report is an important ingredient in that final recipe, right?

Mask

Exactly. The PCE is the Fed's preferred inflation gauge, and this PPI data feeds directly into it. Projections are already being updated. Annual headline PPI inflation is now expected to tick up to 2.5%, with the core number at 2.7%. These aren't crisis levels, but they are stubbornly above the 2% target.

Aura Windfall

It's a delicate dance, then. The producer prices cooled slightly in some areas, which is good news for the inflation fight. But there's no deflation, no sign of economic collapse that would force the Fed's hand to rush into a series of rapid cuts. They have room to be patient.

Aura Windfall

So, as we look toward the horizon, where does this leave us? For norristong_x, planning for the future, what is the wisdom we can glean from the futures market? Where are the smart bets being placed for the path of interest rates as we move into the rest of this year and next?

Mask

The market is now laser-focused on the September 16-17 meeting as the most likely point for a single rate cut. The odds are near 100%, according to the FedWatch tool. But the idea of a whole series of cuts this year has been dialed back significantly. The new forecast is for patience.

Aura Windfall

Patience is a virtue, in life and in economics. It sounds like the projections are for a slow and steady journey back to balance. The Fed's own "dot plot" shows maybe two cuts in 2025, with inflation remaining just a little elevated for a while longer, around 2.4% through 2026.

Mask

Right. The benchmark rate will likely stay in the 4.25% to 4.50% range for now. The key takeaway is that the easy part of the inflation fight is over. Progress from here on will be a grind. Consumers are still feeling the pain from the cumulative price hikes of the last few years.

Aura Windfall

And that is the truth at the center of it all. This has been a fascinating journey through the numbers and the narratives behind them. What we've learned is that the path forward requires awareness, patience, and a deep trust in our own resilience. Thank you for listening to Goose Pod.

Mask

The takeaway is simple: wholesale prices spiked, a September rate cut is likely but not guaranteed to be the start of a trend, and the data itself is under fire. Stay alert. See you tomorrow.

## Wholesale Prices Surge in July, Signaling Persistent Inflationary Pressures **News Title/Type:** Economy / Business News **Report Provider/Author:** Bureau of Labor Statistics (BLS) / Jeff Cox (CNBC) **Date/Time Period Covered:** July 2025 (report released August 14, 2025) ### Main Findings and Conclusions: A Bureau of Labor Statistics (BLS) report released on Thursday, August 14, 2025, revealed that **wholesale prices rose significantly more than expected in July**, suggesting that inflation remains a concern for the U.S. economy. This unexpected surge in producer prices, particularly in services, could impact future Federal Reserve monetary policy decisions. ### Key Statistics and Metrics: * **Producer Price Index (PPI) - Headline:** * **Monthly Change:** Jumped **0.9%** in July. * **Dow Jones Estimate:** A 0.2% gain was expected. * **Significance:** This was the **biggest monthly gain since June 2022**. * **Annual Change:** Increased **3.3%** on an annual basis, the largest 12-month move since February and well above the Federal Reserve's 2% inflation target. * **Core PPI (Excluding Food and Energy Prices):** * **Monthly Change:** Rose **0.9%**, against a forecast of 0.3%. * **PPI (Excluding Food, Energy, and Trade Services):** * **Monthly Change:** Up **0.6%**, the biggest gain since March 2022. * **Services Inflation:** * **Monthly Change:** Moved **1.1% higher** in July, the largest gain also since March 2022. * **Drivers of Services Inflation:** * **Trade Services Margins:** Rose **2%**, potentially linked to President Donald Trump's tariff implementations. * **Machinery and Equipment Wholesaling:** Contributed **30%** of the services increase with a **3.8%** rise. * **Portfolio Management Fees:** Surged **5.8%**. * **Airline Passenger Services Prices:** Rose **1%**. ### Important Recommendations: No specific recommendations were provided in the news report. ### Significant Trends or Changes: * The report indicates a **resurgence of inflationary pressures at the wholesale level**, which could eventually filter through to consumer prices. * Services inflation is a significant contributor to the overall PPI increase. * The unexpected PPI data contrasts with the "benign" Consumer Price Index (CPI) numbers released earlier in the week, creating a mixed inflation picture. ### Notable Risks or Concerns: * **Persistent Inflation Threat:** The substantial rise in PPI suggests that inflation is "coursing through the economy," even if not yet fully felt by consumers. * **Impact on Federal Reserve Policy:** The data has led to a decrease in the perceived certainty of a Federal Reserve interest rate cut in September. As Chris Zaccarelli, chief investment officer at Northlight Asset Management, stated, "This is a most unwelcome surprise to the upside and is likely to unwind some of the optimism of a ‘guaranteed’ rate cut next month." * **Data Accuracy Questions:** The reports come amid escalating questions over the BLS's data accuracy. President Trump's firing of the former BLS commissioner and his intention to nominate E.J. Antoni, a critic of the BLS, highlight these concerns. The BLS has also faced budget cuts and layoffs, leading to changes in data collection methods, including the elimination of approximately 350 categories from input cost counts for the July PPI report. ### Material Financial Data: * **Market Reaction:** Stock market futures fell following the PPI report's release, while shorter-duration Treasury yields moved higher, reflecting increased uncertainty and a potential shift in interest rate expectations. **Contextual Interpretation:** The Producer Price Index (PPI) measures the average change over time in the selling prices received by domestic producers for their output. It is considered a leading indicator for consumer inflation because it reflects costs further up the supply chain. The significant deviation from expectations in July's PPI, particularly the 0.9% monthly increase (compared to a 0.2% forecast), is a strong signal that inflationary pressures are not abating as quickly as anticipated. The Federal Reserve closely monitors inflation to guide its monetary policy, aiming to maintain price stability. While the Consumer Price Index (CPI) had recently shown moderate inflation, the PPI's strong performance suggests that underlying cost pressures remain elevated. This could lead the Fed to reconsider or delay interest rate cuts, as a stronger economy with higher inflation might warrant a more cautious approach to easing monetary policy. The mention of President Trump's tariff implementations and their potential impact on trade services margins adds another layer of complexity to the inflationary landscape. The ongoing discussions about BLS data accuracy, coupled with the bureau's operational challenges, also introduce an element of uncertainty regarding the reliability of economic indicators.

Read original at CNBC →

Wholesale prices rose far more than expected in July, providing a potential sign that inflation is still a threat to the U.S. economy, a Bureau of Labor Statistics report Thursday showed.The producer price index, which measures final demand goods and services prices, jumped 0.9% on the month, compared to the Dow Jones estimate for a 0.

2% gain. It was the biggest monthly gain since June 2022.Excluding food and energy prices, core PPI rose 0.9% against the forecast for 0.3%. Excluding food, energy and trade services, the index was up 0.6%, the biggest gain since March 2022.On an annual basis, headline PPI increased 3.3%, the biggest 12-month move since February and well above the Fed's 2% inflation target.

Services inflation provided much of the push higher, moving 1.1% higher in July for the largest gain also since March 2022. Trade services margins rose 2%, coming amid ongoing developments in President Donald Trump's tariff implementations. In addition, 30% of the increase in services came from a 3.

8% increase in machinery and equipment wholesaling. Also, portfolio management fees surged 5.8% and airline passenger services prices rose 1%.Stock market futures fell following the release, while shorter-duration Treasury yields moved higher.Though PPI is followed less closely than the BLS' consumer price index, it provides important information on pipeline prices.

Together, the measures feed into the Commerce Department's personal consumption expenditures price index, the Fed's primary inflation forecasting gauge, which will be updated later this month.With CPI coming in right around expectations earlier this week, markets had been pricing a virtual certainty that the Fed will lower its key interest rate when it meets next in September.

Following the release, odds of a September cut decreased but only slightly, according to the CME Group's FedWatch."The large spike in the Producer Price Index this morning shows inflation is coursing through the economy, even if it hasn't been felt by consumers yet," wrote Chris Zaccarelli, chief investment officer at Northlight Asset Management.

"Given how benign the CPI numbers were on Tuesday, this is a most unwelcome surprise to the upside and is likely to unwind some of the optimism of a 'guaranteed' rate cut next month.The reports come amid escalating questions over BLS data accuracy.Trump earlier this month fired the former BLS commissioner and said he intends to nominate Heritage Foundation economist E.

J. Antoni as the next head of the bureau. Antoni has been a critic of the BLS and even has floated the idea of suspending the monthly nonfarm payrolls report until data accuracy can be better insured.The BLS has been hamstrung by budget cuts and layoffs that have forced it to alter the way it collects data.

July's PPI report was the first since the bureau eliminated some 350 categories from the exhaustive count of input costs.

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