Wholesale prices in the United States surged in July 2025 at their fastest pace in more than three years, fueled by cost pressures from new tariffs introduced by President Donald Trump.
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According to a report from the U.S. Labor Department, the Producer Price Index (PPI) — which tracks the selling prices received by domestic producers — jumped 0.9% from June to July, far exceeding the 0.2% forecast by analysts. The previous month saw no change in wholesale prices, making the July increase particularly significant.
Economists warn that the spike in wholesale costs could soon translate into higher prices for U.S. consumers, despite recent data showing consumer inflation steady at 2.7% in July. The report revealed that the average effective tariff rate in the U.S. has risen sharply since Trump imposed new levies on a wide range of imported goods.
While the president has defended the tariffs as a way to generate revenue for the government and protect U.S. manufacturers, many analysts argue that the measures are raising production costs and straining supply chains. “New tariffs are continuing to generate cost pressures in the supply chain, which consumers will shoulder soon,” said Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics.
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Oxford Economics senior U.S. economist Matthew Martin noted that the inflation jump poses a dilemma for the Federal Reserve, which has been under pressure from the White House to cut interest rates. “The big picture remains that inflation is further away from the Fed’s target than the unemployment rate and is likely to climb further over the coming months,” he wrote.
The 0.9% month-over-month jump was the largest since June 2022, when post-pandemic inflation was at its peak. Prices for services rose by 1.1%, while goods prices climbed 0.7%, with nearly half of that increase driven by higher food costs. Categories heavily affected by tariffs — including home furniture and apparel — also saw sharp price rises.
The Federal Reserve’s next policy meeting in September could prove pivotal, as it balances inflation risks with calls for interest rate cuts to boost the economy.
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