Wholesale prices raise another red flag for U.S. economy and inflation

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Less than two weeks after U.S. President Donald Trump fired the head of the Bureau of Labor Statistics over the release of weak jobs numbers, the department delivered another batch of troubling economic data for the Trump administration’s agenda: accelerating producer prices.

Wholesale inflation climbed in July at the fastest pace in three years in a sign that import taxes are pushing up prices for domestic producers, and economists warn higher consumer prices could be next.

The producer price index (PPI) rose 0.9 per cent in July from the month before, more than three times faster than expected, and the largest monthly increase since March, 2022, the BLS said Thursday.

Compared with a year ago, top-line producer prices jumped 3.3 per cent, well ahead of the 2.4-per-cent rate economists had expected.

While the annual change in producer prices for core goods, which exclude food and energy, increased at the fastest rate since 2023, the bigger driver of wholesale prices was in services, particularly wholesale and retail trade services, a measure of corporate profits.

The PPI, which measures the change in prices that domestic producers receive for their goods and services, came in hotter than the consumer price index numbers released by the labour department earlier this week.

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The divergence between the two measures “shows that the cost impact is spreading across the supply chain,” David Rosenberg, the president of Rosenberg Research, wrote in a note. “The only question is whether the consumer will be forced to share the burden.”

The resurgence in service sector inflation could also complicate the U.S. Federal Reserve’s job as it decides whether to cut interest rates in September, as Mr. Trump has repeatedly demanded.

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