US wholesale prices jumped 0.9% in July, the largest increase in over three years, as tariffs introduced by President Donald Trump took a toll on producers. The producer price index, which measures selling prices commanded by US producers, rose significantly, sparking concerns about inflation.
Analysts had forecast a smaller increase, but the larger-than-expected rise has renewed worries about inflation pressures. Economists warn that higher wholesale prices will likely lead to higher costs for businesses and consumers.
The average effective tariff rate in the US has soared since Trump took office, and economists predict that the impact of these levies will be costly and difficult to overcome. The Federal Reserve has held off on cutting interest rates, but Treasury Secretary Scott Bessent has called for a half-point cut, citing concerns about inflation.
Wholesale prices for services, including warehousing and investment advice, also rose 1.1%, while goods prices increased 0.7% due largely to higher food prices. Categories heavily exposed to tariffs, such as home furniture and apparel, saw significant price hikes.
Inflation pressures are expected to continue, with inflation forecasts pointing to a climb in the coming months. The Federal Reserve faces a dilemma in responding to these pressures, balancing concerns about inflation with the need to support the economy.
Source: https://www.bbc.com/news/articles/cp89ej4jrn9o