2025-08-15
US PPI Surges 0.9% in July, Largest Monthly Gain Since March 2022
According to the US Bureau of Labor Statistics, released on August 14, 2025, the Producer Price Index (PPI) for all items jumped 0.9% month-over-month in July, far exceeding market forecasts (0.2%) and marking the largest one-month increase since March 2022. On a year-over-year basis, the PPI climbed 3.3%, the highest since February 2025 and a sharp rise compared to June's 2.4%.
Detailed Breakdown (MoM):
Services: Over 75% of the monthly increase came from the services sector, which grew 1.1%. Within services, trade margins surged 2.0%, machinery & equipment wholesaling rose 3.8%, portfolio management fees up 5.4%, and airline passenger services gained 1%.
Goods: Prices for goods advanced 0.7%, driven by a 38.9% spike in vegetables, 2.5% rise in meats, 11.8% increase in diesel fuel, and a 5.0% jump in jet fuel. Gasoline prices, however, fell 1.8%.
Core PPI (excluding food, energy & trade): Increased by 0.6% in July, the largest gain since March 2022, and up 2.8% year-on-year.
Intermediate Demand: Processed goods up 0.8%, unprocessed goods up 1.8%, services up 0.8%, signaling persistent inflation throughout the supply chain.
Stage of Processing: Stage 3 & 1 climbed 1.1%, stage 4 up 0.8%, stage 2 up 0.5%.
The July PPI report shows US wholesale inflation running hotter than expected, with both services and commodity prices accelerating, contrasting with the more subdued readings in recent months. This trend could prompt the Federal Reserve to take a more cautious stance on policy rate cuts or even pause easing expectations. Market reactions included declines in equities, a stronger US dollar, rising Treasury yields, and notable gains in key commodities. If the annual rate continues to outpace the Fed’s 2% target, cost pressures may soon shift to consumers. Overall, the strong PPI reading in July is set to influence economic and market expectations in the months ahead.
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