PPI inflation report July 2025:

Wholesale prices rose far more than expected in July, providing a potential deterrent for the Federal Reserve to lower interest rates in September, a Bureau of Labor Statistics report Thursday showed.

The producer price index, which measures final demand goods and services prices, jumped 0.9% on the month, compared to the Dow Jones estimate for a 0.2% gain.

Excluding food and energy prices, core PPI rose 0.9% against the forecast for 0.3%. Excluding food, energy and trade services, the index was up 0.6%, the biggest gain since March 2022.

On an annual basis, headline PPI increased 3.3%, the biggest 12-month move since February and well above the Fed’s 2% inflation target.

Services inflation provided much of the push higher, moving 1.1% higher in July for the largest gain also since March 2022.

Though PPI is followed less closely than the BLS’ consumer price index, it provides important information on pipeline prices. Together, the measures feed into the Commerce Department’s personal consumption expenditures price index, the Fed’s primary inflation forecasting gauge, which will be updated later this month.

With CPI coming in right around expectations earlier this week, markets had been pricing a virtual certainty that the Fed will lower its key interest rate when it meets next in September.

The reports come amid escalating questions over BLS data accuracy.

President Donald Trump earlier this month fired the former BLS commissioner and said he intends to nominate Heritage Foundation economist E.J. Antoni as the next head of the bureau. Antoni has been a critic of the BLS and even has floated the idea of suspending the monthly nonfarm payrolls report until data accuracy can be better insured.

The BLS has been hamstrung by budget cuts and layoffs that have forced it to alter the way it collects data. July’s PPI report was the first since the bureau eliminated some 350 categories from the exhaustive count of input costs.

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