Wholesale prices rose 0.9% in July, exceeding Wall Street forecasts and potentially hurting President Trump’s push for interest-rate cuts from the Federal Reserve.
The Bureau of Labor Statistics said the Producer Price Index rose 3.3% on an annual basis, the highest 12-month recording since 3.4% in February.
U.S. stocks tumbled upon the news. Dow Jones estimates had expected the monthly gain to be closer to 0.2%.
The PPI, which measures prices that producers receive at wholesale before final sale at checkout, is not as closely watched as the Consumer Price Index, which measures prices that everyday consumers see.
However, both measures are factored into an overall price index that the Fed uses to set rates.
Mr. Trump, who campaigned on ending “Bidenflation,” says consumer prices have been relatively stable despite doomsday predictions about his sweeping tariffs, which are a tax on imports.
While the producer index came in hot, the Consumer Price Index reported Tuesday had been in line with expectations.
“Businesses are eating the increased cost right now,” said Kishore Kulkarni, a distinguished professor of economics at the Metropolitan State University of Denver. “I would say within three to six months, the producers have to increase the price for consumers.”
Chair Jerome Powell and others at the Fed have been reluctant to cut rates because of the volatile nature of Mr. Trump’s trade agenda and the potential for consumer inflation down the road.
The White House recently imposed tariffs ranging between 15% and 41% on more than 67 countries, raising levies to their highest levels in over a century.
Mr. Trump solidified the 10% blanket tariff on all imports and is implementing the 15% rate he negotiated with the European Union, Japan and South Korea.
The National Retail Federation and footwear industry lobbies have urged the Trump administration to moderate tariff levels, saying it will be difficult for companies to absorb the tariffs over the long term.
Democrats seized upon the bump in wholesale prices.
“Trump promised his tariffs wouldn’t hurt Americans, but prices for producers are soaring, and inflation is on its way to your wallet,” Jim Messina, the 2012 campaign manager for President Barack Obama, wrote on X. “Trump’s tariffs aren’t ‘making China pay.’ They’re making YOU pay.”
The BLS on Tuesday said core inflation, which excludes volatile food and energy prices, rose 0.3% for the month and 3.1% on a year-over-year basis.
It is the first time since February that it grew over 3% on a yearly basis, so some economists and congressional critics saw it as a sign that companies are starting to pass along tariff costs to consumers.
The White House is undeterred, pointing to annualized inflation rates that are mild compared to the Biden era and American job-creating commitments from global companies.
“The Trump administration’s policies swiftly put an end to Joe Biden’s inflation crisis, and as trillions in investments pour into the United States, they’re now laying the groundwork for a long-term economic resurgence for the American people,” White House spokesman Kush Desai said.
Mr. Kulkarni said the Fed might relent and cut rates by 25 to 50 basis points, or .25%-0.5%, in September, given competing demands in the economy such as a slowdown in employment.
“That has to happen because the political pressure is getting too much, people are losing jobs,” he said.
Yet Mr. Trump is moving on from Mr. Powell, whose term ends in May. He’s considering a small set of potential nominees who are more likely to cut rates, so U.S. borrowers have better terms.
Mr. Trump is considering a lawsuit against Mr. Powell over the high cost of a renovation project at the Fed building in Washington.
Mr. Powell has brushed off White House criticism, saying he is focused on his twin mandate of stable prices and maximum employment.
• Tom Howell Jr. can be reached at thowell@washingtontimes.com.