U.S. wholesale distributors are confronting growing cost pressures as the latest Producer Price Index (PPI) reveals broad-based price increases across goods, services, and intermediate demand. The Bureau of Labor Statistics reported Thursday that the PPI for final demand rose 0.9% in July, the largest monthly gain since February, with a 12-month increase of 3.3%, marking the strongest year-over-year rise since early 2025.
The increase is driven by both goods and services. Final demand services climbed 1.1%, led by a 2% rise in trade margins, which measure the markups wholesalers and retailers collect. Machinery and equipment wholesaling saw prices rise 3.8%, the largest contributor in the services category. Other service sectors, including portfolio management, securities brokerage, traveler accommodation, automobile retailing, and truck freight transportation, also added to the increase.
Final demand for goods rose 0.7%, propelled by a 1.4% jump in food prices. Fresh and dry vegetables surged 38.9%, while meats, diesel fuel, jet fuel, nonferrous scrap, and eggs contributed to the gains. Gasoline prices declined 1.8%, and certain processed foods and plastic materials fell. Excluding food and energy, goods rose 0.4%, while energy alone increased 0.9%.
Intermediate demand, which tracks the cost of goods and services used to produce final products, also rose sharply. Processed goods for intermediate demand increased 0.8%, led by diesel fuel, industrial electric power, jet fuel, meats, and aluminum mill shapes. Unprocessed goods climbed 1.8%, driven by raw milk, crude petroleum, nonferrous scrap, livestock, slaughter poultry, and corn. Services for intermediate demand rose 0.8%, reflecting higher costs in brokerage, portfolio management, courier services, food and alcohol wholesaling, data processing, and metals wholesaling.
Prices rose across production stages, with stage 4 intermediate demand up 0.8%, stage 3 up 1.1%, stage 2 up 0.5%, and stage 1 up 1.1%.
The PPI highlights rising costs for distributors across multiple sectors. Machinery and equipment wholesalers face higher service and trade costs, while food and beverage distributors contend with sharp increases in fresh produce, meat, and transport-related energy costs. Energy distributors are dealing with rising diesel and jet fuel costs, adding to operational expenses despite falling gasoline prices.
Distributors handling intermediate goods—including metals, electric power, petroleum, and agricultural products—are also experiencing cost pressure. Trade-heavy services such as brokerage, metals, and food wholesaling are seeing increased margins, further compressing profitability.
The data suggests that distributors will need to focus on pricing strategies, inventory management, and supply chain efficiency to maintain margins. Rising costs across goods, services, and multiple stages of production indicate sustained inflationary pressure rather than isolated spikes. The PPI for August is scheduled for release on Sept. 10.
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