Stock markets initially rallied to record highs on Tuesday after July’s consumer inflation data came in slightly better than expected at 2.7% annually, matching June’s level.
However, the celebration was short-lived as Thursday’s Producer Price Index shocked investors with a 0.9% monthly surge – the biggest jump since June 2022 and far above the 0.2% forecast.
The dramatic wholesale inflation spike caused stocks to reverse course, with major indexes falling as traders scaled back expectations for multiple Fed rate cuts. The PPI surge suggests tariff-related costs are finally hitting the production pipeline, potentially foreshadowing higher consumer prices ahead and complicating the Fed’s September rate decision.
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