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Breaking just a few moments ago. Key new data showing wholesale inflation heated up last month.
That's a potential sign for the prices consumers may see on store shelves in the months ahead. Let's bring in CNN's Vanessa York, who has been tracking all of this.
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What are the headlines here? Yeah, this report just out showing that the prices that businesses pay has heated up.
So you're looking at a year over year change of 3.3%. The estimate was an acceleration to 2.9%.
So obviously above that. And then on the monthly basis
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the estimate what people expected was 0.2%. That's coming in at 0.9%.
So quite a bit higher than what was expected. We are seeing increases both on the goods and services side.
So the products and then the services like airfares are hotels.
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But all of those categories are on the rise. And you can see that uptick just right there in the month of July spiking up after kind of a volatile recovery after those pandemic highs.
Key things to look at in goods. We saw the price of food,
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the price that businesses are paying for food up 1.4%. And look at this.
This is interesting. Fresh and dry fruits and vegetables kind of a category that is interesting to look at because we import a lot of vegetables but not from countries that are heavily tariffs.
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So there's something else going on. But this accounted for a quarter of the increase of all goods.
This could be because of labor issues with immigration. It could be weather.
It could be transportation costs which also rose in the month of July.
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And then on the services category, you saw transportation and warehousing really increasing their trade services. These are the margins that businesses take in.
Those actually grew. And that is because maybe they're passing more of their costs
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down to the consumer. And then finally in terms of travel and accommodations on the rise again, so you're seeing hotels up 3.1%.
But if you see there, look at that dramatic increase from the month of June when we saw levels
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that really we haven't seen in a while in July, now indicating a huge spike. The reason we look at this report in particular, Jessica, is because ultimately businesses will have to make a decision.
Do they pass this down to the consumer? Right.
Clearly they're paying more. And does that end up with all of us
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and what do they do? Also, the Port of Los Angeles moving more than a million containers in July.
That's a record month. What does all that mean?
Well, it sort of makes sense, right? Because you had a lot of businesses bringing in a lot of stuff to beat the reciprocal tariffs
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that were expiring on August 1st, and that went into effect on August 7th. And then you were having a lot of people move a lot of stuff in from China trying to beat those tariffs potentially going up.
There's been a 90 day pause since then, but a million containers, more than a million containers moved in the month of July
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at the Port of Los Angeles. That's an 8% increase from the previous year and really trending up 5% on the year in terms of imports that they're bringing into the port.
Jeanne Sorokin, the head of the Port of Los Angeles, said, though, that he believes that the surge is behind us.
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He believes that surge was because people were trying to get stuff in before those tariffs rose, but likely the rest of the year will kind of resume back to normal levels. But not surprising that we saw this increase in inflation for businesses, given that they were buying so much
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and bringing that in and at a higher rate. Right.
And so, as you know, the question now is who pays the consumer pay for that? How much can they take on.
Right. All right Vanessa, thank you so much Kate.
Joining us right now for some more important context on this. As a senior markets reporter at Access
03:41
Madison Mills, thanks for coming back in Madison. Okay.
So producer price index important an important read. How surprising is this?
It's a huge upside. Surprise.
It's the biggest monthly upside surprise that we've had in three years. We were expecting 8.2% game.
It came in at 0.9 percent
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month over month here. And this is really critical because this goes into another data point that the Federal Reserve is keenly looking at when determining whether or not to cut interest rates.
And we had the Treasury Secretary talking about a 50 basis point cut in the September meeting. A data point like this
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is going to make that very difficult for the fed to justify another data point that they're taking into account. And everyone has to is so after Tuesday's not as bad as it could be consumer price consumer price is reading added together with this.
What is the picture that it's painting? What story is this telling?
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Well, it's telling a story of a market where we're going to continue to see prices going up. The CPI print that you mentioned, that's more backward looking than this data.
This tells us how producers, how companies are thinking about pricing going forward. So it's more of that forward
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looking data. And it's painting a picture of prices going up.
You were just talking about the port of LA as well, and how we did see companies pulling forward their inventory. So maybe they didn't have to raise prices so much previously because they had stuff booked up.
And now we're starting to see the impact of that.
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They pull it in and then you will then see the consumer prices obviously going up eventually when that slows down, which gets me to what we have heard from the white House and the president, because whenever we have the white House on, they are very adamant that prices are not going up. I mean, they
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they straight, they believe the prices are not going up and that's what they see. But and because of that, the president has been lashing out over and over again to against anyone who says that they are.
that includes, of course, last week
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Goldman Sachs. He he, he reached out via social media to the Goldman Sachs CEO and said that he should fire his lead economist over a report on tariffs that he didn't like.
And yesterday, Goldman Sachs pushed back. Let me play this.
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We stand by the results of this study. Our conclusion is that U.S.
businesses have borne most of the tariff costs so far because it takes time to negotiate lower import prices or to pass price increases along to consumers. But if the MOStrillionECENT tariffs,
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like the April tariffs follow the same pattern that we've seen with those earliest February tariffs, then eventually by the fall, we estimate that consumers would bear about two thirds of the cost. And by the fall, we're definitely going to have some answers to that.
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But my question on this really is the president the movement's like fire your economist because I don't like their read, or I'm going to fire the head of the BLS because I don't I don't I don't like the July jobs report. That level of doubt and uncertainty
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that it injects into the economy. Are we seeing evidence of that?
Well, Wolf, is difficult to parse at the moment. Is you talked about the CPI numbers this week.
Those looked pretty good for the white House on the inflation front. But then today's numbers showing the opposite story.
They're showing a story of prices
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going up. So it's difficult to suss out how the white House feels about the data when depending on how good the data is, their messaging might shift going forward.
Here. What I can tell you is that I like talking to people at these companies because they can tell me
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how they are viewing prices, and it seems like it's very company specific. You just heard in that sound bite.
It's sector specific as well. In today's data, it looks like wholesale manufacturers on things like machinery are really struggling with tariffs.
And so it's going to be that kind of detail going forward. That's going to help us determine
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where prices are getting higher at the most. But an important read today to add in some more facts and data to this picture.
It's great to see you. Thanks for coming in.