Inflation, as measured by the producer price index, shot up to 3.3% for the year ending in July, the Bureau of Labor Statistics reported Thursday — the largest 12 month increase since February.
On a month-to-month basis, the price index increased by 0.9%, much more than the 0.3% rise that was expected.
Recommended Stories
- What has changed with Social Security in 2025?
- Trump team anxious over court threat to tariffs
- US adds $1 trillion to national debt in less than a year
Core PPI inflation, which strips out volatile food and energy prices, rose 3.7% on an annual basis. Core inflation was 0.9% on a monthly basis.
The report comes a day after the more closely watched consumer price index held steady at 2.7%, suggesting that the upward price pressures from tariffs may not be as potent as initially feared.
There is ongoing uncertainty about how Trump’s sweeping tariff agenda might affect prices. It is also unclear to what degree they will complicate the Federal Reserve’s mission to drive down inflation while keeping the economy and labor market afloat.
The Fed’s goal is 2% annual inflation.
So far this year, the Fed has declined to offer stimulus by cutting interest rates. That is likely to change in the months ahead, though, as the most recent jobs report came in worse than expected and featured major downward revisions, indicating that the labor market is weaker than previously thought.
The July jobs report revealed that some 258,000 fewer jobs were added in May and June than previously reported. That means the three-month moving average of job gains was just 35,000 in July, below the level needed to keep pace with population growth.
EGGS, GROCERIES, GAS, HOUSING: WHAT’S HAPPENED WITH KEY PRICES UNDER TRUMP
Still, economic output has been up, according to the most recent reading. U.S. gross domestic product expanded at a 3% annual rate in the second quarter, the Bureau of Economic Analysis reported.