The latest data show rising prices remain a major threat to the U.S. economy, contradicting President Donald Trump’s claim that inflation does not pose a problem as the effect of tariffs trickles down.
The Producer Price Index (PPI) released Thursday showed a surprising jump in wholesale prices beyond what economists had expected, indicating higher prices could soon hit American consumers.
The PPI increased 0.9 percent last month, excluding volatile food and energy prices—its biggest monthly jump since June 2022. Economists had anticipated it would be up 0.2 percent.
PPI also showed that wholesale inflation was up 3.3 percent from a year ago, the largest year-over-year increase since February.
The new numbers are bad news for the president, who for months has raged at the Federal Reserve to lower interest rates despite uncertainty around the impact of his tariffs.
While the PPI isn’t followed as closely as the Consumer Price Index (CPI), it is among the indicators used to benchmark increasing prices.
“A CPI spike is next,” warned Peter Schiff, chief economist for Euro Pacific Asset Management, in an X post. “So much for rate cuts. I wonder who Trump will fire for rigging the PPI to make him look bad.”
Trump fired Bureau of Labor Statistics Commissioner Erika McEntarfer on August 1 hours after the July jobs report showed growth had slowed dramatically.
Trump has claimed repeatedly and loudly that foreign exporters—not American consumers—would shoulder the cost of increased tariffs.
“So much for foreigners paying tariffs. If they did, PPI would be falling,” wrote Joseph Brusuelas, chief economist for RSM US, on X.
He added that the idea foreigners were paying for tariffs “got destroyed” and that wholesale inflation would pass through to consumers.
“We’re going to have some issues with pricing around the holidays,” Brusaelas said on the Schwab Network.
Even Maria Bartiromo on Fox Business—who has earned a reputation for being soft on Trump—reacted to the latest data on Thursday with concern.
“It’s also troubling because, in the core PPI, it was up nine-tenths of a percent versus an estimate of two-tens of a percent,” she said. “Year-over-year, the core up 3.7 percent, also higher than the estimated expectation.”
The markets took a dip early on Thursday as investors reacted to the wholesale inflation numbers. It is unclear how the data could impact the Federal Reserve’s thinking about cutting rates at its next meeting in September.
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