In July, the US Producer Price Index (PPI) for final demand rose 0.9%, marking the most significant monthly increase since early 2025, according to the US Bureau of Labor Statistics. Prices for final demand services led the rise with a 1.1% increase, mainly driven by higher trade service margins and machinery wholesaling costs. Final demand goods prices rose 0.7%, boosted by a sharp 38.9% jump in fresh and dry vegetable prices. Over the past year, the PPI increased 3.3%, the highest annual gain since February 2025. The BLS writes:
The Producer Price Index (PPI) for final demand rose 0.9 percent in July, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices were unchanged in June and increased 0.4 percent in May. On an unadjusted basis, the index for final demand advanced 3.3 percent over the past 12 months, marking the largest 12-month increase since February 2025, when it rose 3.4 percent.
More than three-quarters of July’s broad-based increase can be attributed to the index for final demand services, which rose 1.1 percent. Meanwhile, prices for final demand goods increased 0.7 percent.
The index for final demand less foods, energy, and trade services rose 0.6 percent in July, the largest increase since March 2022. Over the past 12 months, this core measure advanced 2.8 percent.
Final Demand
Final Demand Services:
The index for final demand services rose 1.1 percent in July, the largest gain since March 2022. Over half of this increase came from a 2.0 percent jump in trade service margins, which measure changes in retailer and wholesaler profit margins. Prices for final demand services excluding trade, transportation, and warehousing rose 0.7 percent, while transportation and warehousing services rose 1.0 percent.Product Detail (Services):
Roughly 30 percent of the July increase in services prices came from a 3.8 percent jump in machinery and equipment wholesaling margins. Increases were also seen in portfolio management, securities and investment services, traveler accommodation, automobile retailing (partial), and truck freight transportation. Offsetting these gains, prices for hospital outpatient care fell 0.5 percent, and indexes for furniture retailing and pipeline energy transportation also declined.Final Demand Goods:
Prices for final demand goods increased 0.7 percent in July, the largest monthly gain since January. About 40 percent of that increase was due to a 1.4 percent rise in food prices. Prices for goods excluding food and energy rose 0.4 percent, while energy prices rose 0.9 percent.Product Detail (Goods):
A 38.9 percent surge in fresh and dry vegetable prices accounted for a quarter of the increase in goods prices. Prices also rose for meats, diesel fuel, jet fuel, nonferrous scrap, and fresh eggs. On the other hand, gasoline prices fell 1.8 percent, while poultry and plastic resins and materials also saw price declines.
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