US wholesale prices just jumped most in 3 years
The latest Producer Price Index, which measures the average change in prices paid to producers, jumped 0.9 percent from June, lifting the annual rate to 3.3 percent, according to Bureau of Labor Statistics data released on Thursday.
It means costs were sharply on the rise for producers and manufacturers in July, a sign that higher prices could soon filter down to American consumers, reports CNN.
The PPI serves as a potential bellwether for the prices consumers may see in the months ahead.
Thursday's readings far exceeded economists' expectations for prices would rise by just 0.2 percent in July and 2.4 percent annually.
And considering the PPI covers the domestic output of goods and services and excludes imports, the potential consumer price inflationary impact could be underestimated, noted Brian Bethune, an economist at Boston College.
The Dow fell 175 points, or 0.4 percent, at the opening bell on Thursday. The broader S&P 500 fell 0.35 percent and the tech-heavy Nasdaq Composite dropped 0.3 percent. All three indexes mostly pared those losses later in the morning.
Earlier this week, the Consumer Price Index for July showed that falling gas prices kept a lid on overall consumer price hikes but that tariff-sensitive goods continued to get more costly.
Traders pared their bets that the Federal Reserve would cut its benchmark lending rate at its September meeting.
Excluding food and energy, core PPI also shot higher by 0.9 percent, sending the annual rate to 3.7 percent, the highest level since March.
On the goods side, higher food prices were the biggest culprit behind a 0.7 percent monthly increase. Raw agricultural products leapt 12.8 percent highest from June; and within that, fresh and dry vegetables saw a 38.9 percent monthly price surge, which is the largest since March 2022.
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