Headline PPI Holds Steady in July, but Core Price Pressures Persist

The Bureau of Labor Statistics reported Thursday that its Producer Price Index (PPI) for final demand was unchanged in July, a reading that stands in contrast with the 4.7 percent increase recorded over the past 12 months. Consumer prices showed a similar pattern: the Consumer Price Index (CPI-U) rose 0.1 percent for the month but remained 3.4 percent above its July 2025 level. The data offered little evidence of genuine disinflation, especially with gold touching 4,387 dollars per ounce during the week, a sign that many market participants continue to favor hard assets amid persistent price pressures.

Excluding the volatile food, energy, and trade components, the picture looks less calm. Core PPI advanced 0.4 percent in July, holding its 12-month gain at 4.7 percent. Price pressures were more pronounced at earlier stages of production: processed goods for intermediate demand cost 9.9 percent more than a year earlier, and stage 4 intermediate prices rose 6.7 percent. July’s 0.7 percent decline in final-demand goods was driven largely by a 5.7 percent drop in wholesale gasoline prices, even as services continued to rise. Portfolio-management fees increased 6.5 percent, and prices for management consulting, internet advertising, and Postal Service offerings also moved higher. Government purchasing was not insulated from these pressures: prices paid by federal, state, and local agencies for goods rose 9.7 percent over the past year, and prices for services increased 4.2 percent.

The CPI data pointed to similar dynamics. A 1.5 percent July decline in energy prices held down the headline figure, but the energy index remained 14.7 percent above year-ago levels, with gasoline up 24.6 percent. Core CPI, which excludes food and energy, rose 0.2 percent for the month and 2.5 percent over the past 12 months. Shelter costs accounted for roughly two-thirds of July’s all-items increase, while several services indexes advanced: medical care services rose 0.4 percent, airline fares increased 2.2 percent in July and 25.5 percent over the past year, and household utility costs continued to rise. Electricity costs stood 4.2 percent above last July, and residential natural gas service was up 4.3 percent. Lumber prices, often viewed as an early indicator of construction demand, rose 5.0 percent in July at the wholesale level.

Both reports suggest that inflation’s “cooling” remains uneven, concentrated in energy on a month-to-month basis while broader services and intermediate inputs remain elevated. With the next PPI report due September 10 and the August CPI report due September 11, policymakers face a narrow path. Higher interest rates risk destabilizing credit markets, while looser policy could allow current price gains to become entrenched. Meanwhile, gold continued to trade near recent highs, an indication that savers and institutions continue to favor tangible stores of value.