BLS Producer Prices for July, Chart by Mish

The Bloomberg Econoday consensus was for producer prices to rise 0.2 percent.

However, the BLS reports Producer Prices for Final Demand rose 0.9 percent.

Final Demand Services

• The index for final demand services moved up 1.1 percent in July, the largest advance since rising 1.3 percent in March 2022. Over half of the broad-based July increase is attributable to margins for final demand trade services, which jumped 2.0 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand services less trade, transportation, and warehousing and for final demand transportation and warehousing services advanced 0.7 percent and 1.0 percent, respectively.
• Product detail: Thirty percent of the July rise in prices for final demand services can be traced to margins for machinery and equipment wholesaling, which jumped 3.8 percent. The indexes for portfolio management; securities brokerage, dealing, investment advice, and related services; traveler accommodation services; automobiles retailing (partial); and truck transportation of freight also advanced. In contrast, prices for hospital outpatient care fell 0.5 percent. The indexes for furniture retailing and for pipeline transportation of energy products also declined.

Final Demand Goods

• Prices for final demand goods moved up 0.7 percent in July, the largest advance since rising 0.7 percent in January.
• Forty percent of the broad-based increase in July can be attributed to the index for final demand foods, which jumped 1.4 percent. Prices for final demand goods less foods and energy and for final demand energy moved up 0.4 percent and 0.9 percent, respectively.
• Product detail: A quarter of the July advance in the index for final demand goods can be traced to prices for fresh and dry vegetables, which jumped 38.9 percent. The indexes for meats, diesel fuel, jet fuel, nonferrous scrap, and eggs for fresh use also rose. Conversely, prices for gasoline decreased 1.8 percent. The indexes for canned, cooked, smoked, or prepared poultry and for plastic resins and materials also declined.

Month-Over-Month Details

• Final Demand: 0.9 percent
• Final Demand Goods: 0.7 percent
• Final Demand Services: 1.1 percent
• Final Demand Food: 1.4 percent
• Final Demand Less Food and Energy: 0.9 percent

PPI Final Demand Year-Over-Year

(Click on image to enlarge)

Year-Over-Year Details

• Final Demand: 3.3 percent
• Final Demand Goods: 1.9 percent
• Final Demand Services: 4.0 percent

In all of the above, it appears PPI year-over-year has bottomed and heading higher.

Tariff Impact?

That’s what this jump looks like to me, especially the margins for machinery and equipment wholesaling, which jumped 3.8 percent.

Food imports are another concern.

Whatever the cause, some of this will undoubtedly be passed on to consumers.

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