Producers in the US raised their prices at the fastest pace in more than three years last month as companies grappled with new costs from tariffs introduced by US President Donald Trump.
The producer price index, which measures the selling price commanded by US producers, jumped 0.9% from June to July, after being flat the previous month, according to the Labor Department.
That was a much bigger leap than the 0.2% forecast by analysts, who predict that the higher wholesale prices will soon mean higher prices for US consumers.
The report renewed worries about inflation in the months ahead, despite recent data showing that the increase in consumer prices had held steady at 2.7% in July.
The average effective tariff rate in the US has soared since Trump has come into power and put new levies on most goods entering the country.
He says tariffs, which are a tax on imports, will raise money for the government and give US manufacturers an edge over their foreign competitors.
But economists have warned that expanding production in the US will be costly and difficult and that the primary impact of the new levies will be higher costs for businesses and consumers.
Analysts said the building inflation pressures could also complicate calls for the US central bank to lower interest rates, as Trump has demanded... (our emphasis)
Most economists have been saying that the delayed impacts of Trump's tariffs, his chaotic policy shifts, and his attempts to control monetary policy through the Fed were most likely to start impacting consumers with higher inflation this Fall. Unfortunately, the most likely response to this producer price index report will be for Trump to fire the person in the Labor Department responsible for delivering the bad news.
(Image: via MarketBeat.com)
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