Should we worry about the latest spike in US producer prices?

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Before we dig into the data, it is important to understand what the Producer Price Index (PPI) actually measures. Many people think it tracks the prices that companies pay for their supplies. But that is not correct.

The PPI actually measures the average change in selling prices that United States producers get for the goods and services they sell. It tracks prices from the point of view of the seller.

It covers the first price received for products across many industries like manufacturing, farming, mining, and services.

The most important part of this gauge is called final demand. This refers to goods and services that are sold to the final user, the consumer.

As you have probably heard, the PPI inflation rose +0.9% MoM in July, up from 0.0% in June, the biggest jump since June 2022 and above expectations of a +0.2% increase.

This sparked the whole debate of whether inflation is accelerating in the world’s largest economy and whether the Fed should really resume rate cuts in September. Let’s examine the entire inflation story, including all major metrics as well as leading and alternative indicators.

For reference, here are the previous analyses of US inflation posted in July 2025 and December 2024.

DEEPER DIVE INTO PPI AS WELL AS OTHER MAJOR INFLATION METRICS

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