US wholesale inflation surged in July by the most in three years, dampening hopes for aggressive Federal Reserve rate cuts in September.
The Producer Price Index (PPI) data showed inflation accelerating through the economy, even as consumer prices remained relatively stable. This split between wholesale and consumer inflation has created uncertainty about Fed policy, with traders now seeing only a 90% chance of a September rate cut, down from certainty earlier in the week.
The data highlights ongoing tensions between President Trump’s push for lower rates and the Fed’s concerns about inflation risks from tariffs.