US CPI/PPI - 2025-08-11

PPI UPDATE: The charts are updated to reflect this morning's terrible PPI print, final demand up 0.94% on the month, or 11.95% at an annual rate. The worst culprits are fuels, foodstuffs and raw materials. Aluminum prices rose, steel prices fell -- so who knows whether it's a tariff effect. Last month's print, with all the same tariffs in place, was a just as shockingly low 0.03%, or 0.34% at an annual rate. Trump's outrage over the July jobs report has created a new frame of suspicion in which all economic data will be interpreted. The tariffs showing up at last? Reality, or the revenge of the BLS?

Well, this will confound anyone with tariff derangement syndrome. Headline CPI came in at 2.38% at an annual rate for July, slightly below the Fed's 2.5% CPI target. Core was hotter, at 3.94%. Goods are supposedly the part of the consumption basket that will inflate because of tariffs, yet the goods category deflated at an annual rate of 0.38%. At a high level, health care services seem to be the culprit. At the most granular level, just five categories -- all services, from OER (of course) to full service meals, explained 80% of the total headline inflation, and account for only 36% of the basket weight. Must be all those full service meals we are importing from China, on which we must pay Trump's tariffs.