Intermediate prices will eventually impact consumer prices. 
Yesterday, I discussed the Producer Price Index PPI for Final Demand. Today, let’s look at intermediate stages.
Intermediate Demand by Production Flow
Stage 4 intermediate demand: In July, prices for stage 4 intermediate demand advanced 0.8 percent, the largest rise since jumping 1.0 percent in January 2023. In July, the index for total services inputs to stage 4 intermediate demand increased 1.0 percent, and prices for total goods inputs rose 0.5 percent. Advances in the indexes for portfolio management; securities brokerage, dealing, investment advice, and related services; courier, messenger, and U.S. postal services; food and alcohol wholesaling; meats; and diesel fuel outweighed decreases in prices for natural gas to electric utilities, cherries, and business loans (partial). For the 12 months ended in July, the index for stage 4 intermediate demand moved up 2.6 percent, the largest 12-month increase since rising 2.6 percent in March 2025.
Stage 3 intermediate demand: In July, the index for stage 3 intermediate demand advanced 1.1 percent, the largest increase since moving up 1.2 percent in August 2023. In July, prices for total goods inputs to stage 3 intermediate demand jumped 2.0 percent, and the index for total services inputs rose 0.5 percent. Increases in prices for diesel fuel; raw milk; jet fuel; courier, messenger, and U.S. postal services; slaughter poultry; and livestock outweighed declines in the indexes for freight forwarding, metal coating and allied services, and ungraded chicken eggs. For the 12 months ended in July, prices for stage 3 intermediate demand rose 2.1 percent, the largest 12-month advance since moving up 2.1 percent in February 2025.
Stage 2 intermediate demand: In July, prices for stage 2 intermediate demand advanced 0.5 percent after rising 0.9 percent in June. In July, the index for total goods inputs to stage 2 intermediate demand increased 0.6 percent, and prices for total services inputs moved up 0.4 percent. Advances in the indexes for crude petroleum, food and alcohol wholesaling, nonferrous scrap, data processing and related services, portfolio management, and carbon steel scrap outweighed declining prices for pipeline transportation of energy products, natural gas, and business loans (partial). For the 12 months ended in July, the index for stage 2 intermediate demand fell 0.2 percent.
Stage 1 intermediate demand: Prices for stage 1 intermediate demand increased 1.1 percent in July, the largest advance since rising 1.3 percent in August 2023. In July, the index for total services inputs to stage 1 intermediate demand jumped 1.4 percent, and prices for total goods inputs moved up 0.8 percent. Increases in the indexes for securities brokerage, dealing, investment advice, and related services; diesel fuel; data processing and related services; portfolio management; courier, messenger, and U.S. postal services; and traveler accommodation services outweighed decreasing indexes for natural gas to electric utilities; soybean cake and meal; and building materials, paint, and hardware wholesaling. For the 12 months ended in July, prices for stage 1 intermediate demand advanced 2.5 percent, the largest 12-month rise since moving up 3.8 percent in February 2023.
PPI Intermediate Demand by Category
PPI Intermediate Demand Percent Change Month-Over-Month
- Durable Goods: 1.3 percent
- Manufacturing: 0.4 percent
- Construction: 0.1 percent
- Food Manufacturing: -0.1 percent
- Unprocessed Food and Feed: 2.9 percent
Construction is the only real bright spot because unprocessed food increases will eventually become processed food increases.
Producer Prices for July Unexpectedly Rise the Most Since March 2022
Yesterday, I reported Producer Prices for July Unexpectedly Rise the Most Since March 2022
Month-Over-Month Details
- Final Demand: 0.9 percent
- Final Demand Goods: 0.7 percent
- Final Demand Services: 1.1 percent
- Final Demand Food: 1.4 percent
- Final Demand Less Food and Energy: 0.9 percent
Intermediate goods suggest still more problems are on deck.
Also consider Hoot of the Day: Trump Asks Goldman to Replace Economist Over Tariff Stance
All that can be said is Tariffs have not amounted to much price inflation yet.
That’s starting to change. Producer price increases at the intermediate stage will impact prices for final consumption.
Then the PPI for final consumption will impact the CPI.
Of course, a huge recession and falling demand could disrupt this chain.
With inflation rising,you keep real rates deeply negative,that destroys the debt.
It’s also good for the stock market and people who are retired.
Who cares about a destroyed economy as long as the markets keep rising?
I have this ineradicable sentiment that America is pretty much cooked, and will be overdone by the time Trump leaves. The great shame is that we had a demented retard in office in the form of autopen Biden when we needed a real leader. I don’t think Vance is Presidential material for 2028 unless you compare him to Trump/Biden, and someone who has the Engineering corps raise the level of the Ohio river to increase the pleasure of his canoeing holiday, has some abuse of power/narcissist issues to deal with. He’ll be no saviour, plus he’s ex military (meaning warmonger in plain speak).
America is on the wrong track and there is no one in sight capable of uniting the nation and setting it on the right track again. Feral capitalism stinks.
Buy the time tariffs really kick in trump will have some other drama going on. And his followers wont care or will blame biden
To arrive at an estimate, multiply the import share (0.14) by the effective passed-on tariff rate (0.15 × 0.60 = 0.09), yielding 0.0126 or 1.26%. For the consumer estimate impact, first scale the model benchmark (2.2% for 25% full pass-through = 0.088% per 1% tariff), apply to 15% (1.32%), then adjust for 60% pass-through (1.32% × 0.60 = 0.792%, rounded to 0.8%). Meaning inflation from the tariffs would rise .8% over a three-month period.
If however the tariffs are passed through at 100% then: 0.14 × 0.15 = 0.021 (2.1%). Consumer impact: (2.2% / 25%) × 15% = 1.32%, rounded to 1.3%.
Over a three-month period the total additional inflation will be between .8% and 1.3%.
You can write this on a napkin and see that the tariffs will not produce enough inflation to matter to the bond and stock markets and barely perceivable to the public. On top of it it is a one-off uptick and that’s it. That is why the markets shrugged it off.
I’m fine with it being just enough inflation to keep Powell from pulling the trigger in Sept. At this point, rate cuts will have more to do with the labor market than tariffs. The job market is definitely slowing down & appears to be right in line with where we were six months before the dotcom & GR. The march to the end of the year will be interesting.
But what happens if consumers can’t pay the higher prices? Seems like stock holders would have to absorb the increase at the wholesale level.
Today Kamala will meet with Putin, tomorrow with the Ayatollah. That’s why got Timmy and Kamala. She saved us from Trump and his idiots. Thanks Biden. U are smarter than we thought ! After decades of penetration a Muslim Bros might take
over NYC. Zoomers hate Israel so much, that’s good enough. Islam is spreading
in Europe, S. America and the US. Within a decade when the death bubble will peak Muslim Bros will compete with Christianity.
Crazy stuff. I don’t need drugs, just read what you got there. You ought to be against the law unless this stuff saves lives.
The LT trend: when u will be in a coffin Muslims in the US will multiply, have
families with 3/8 kids, counter women lib, counter free sex and abortion, which destroyed families since the sixties and weakened Christianity. After decades of penetration, Erdogan, Qatar, Egypt and the Saudis will have a Muslim Bros mayor in NYC first, before entering congress. After dismantling Jasa, Genghis Khan heirs will rule one state, a free and democratic state for Arab and Jews, but by then u will be dead !
Thanks to freedom of religion, speech and thought your herd might face reality.
“Intermediate prices will eventually impact consumer prices.”
Not necessarily. The guys over at Real Investment Advice have been covering this very accurately over the past several months.
https://shorturl.at/XLeLs
This week we shopped two food stores. the produce section was nearly wiped out in both. I managed to get a pint of blue berries for $6. No wonder produce is up 40% in the ppi.
That’s good news !
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MAGA 7D chess match:
collecting trillions and trillions of tariff dollars (Trump words) paid by other nations (I didn’t know those other countries have that type of money, good to know) while having no local inflation (as we fire BLS head to not spoil a party).
Mission accomplished, thank you for your attention to this matter
But yeah lets cut rates 200bp like Trump wants
Don’t really need it!You just keep printing and produce new debt.
When a country has so much debt,you need real rates to go deeply negative to destroy the debt.
Best thing for that is keeping rising inflation and lie on the numbers.
Powell is helping Trump:keeping rates high enough will help selling treasuries.
Without a strong immune system terrorist might take advantage of our weakness. Trump increase the defense budget, while putting the rest on diet. Prepare for a war
to prevent a war.
Terrorists strike daily in the US, even if we ignore what the state is doing: there’s a school shooting about once a day now? But if the terrorist is a anti social right wing madman it doesnt count, right? So lets not kid ourselves and pretend that all the extra government spending is meant to protect anyone, perhaps billionaires excepted. It is there to make the rich richer and to build a police state to suppress any protests against that.
Are you drunk?
What are stages 4,3,2 and 1: stage #4 final demand. Finished goods and services consumers buy. Stage #4: higher service prices, but not in goods. #3: intermediate demand for goods and services that will that soon will be sold to consumers. #2: intermediate products for stage #3. Stages #2 and #3 can be negotiated, haggled, or absorbed. Stage #1: basic raw materials: oil is down, coffee up.
And Trump/GOP will own it 100% and get 100% of the blame right as midterms are right around the corner.
But today’s inflation is all a joke, wait till all those tens of millions (or billions according to MAGA nuts) are deported and there’s no more cheap slave labor. Then watch more labor vaporize as boomers get too old, sick and tired and retire or expire. GenX not too far behind all that and the America’s burdens will be on the shoulders of Millenials and Zoomers (lol….think about that for a long time and let it set it).
The inflation pain will accelerate now and god help everyone if the Fed does steep cuts. There’s still time to get out of the slowly boiling pot for you frogs and lobsters but only if you have a plan to jump out of the pot onto somewhere safe and not into a frying pan. You gotta beat the rush. For all that you need……
an exit strategy. 🙂
Zoomers are getting absolutely screwed on a level not seen since the silent generation. Same massive pandemic, same multiple gigantic recessions, same parasitic wealthy class, hell even same fascism.
People complain Zoomers are going to kill America and my response is this: Why would anyone born in 2000 or later NOT want this lumbering corpse buried? Spending your whole childhood watching the nation you were told was great be stripped down for parts and sold off piece by piece by used car salesmen probably has a lot to do with the nascent demands for European ways of doing things in Mamdani’s camp (which is a big one that will eventually be the new mainstream).
And that’s why a communist is leading the NY mayor race. Like I said, think about it a long time and let it sink in. I agree, zoomers are getting screwed. One of my kids left the USA a few years back and has no plans to return.
I have been very vocal about my plans to leave myself because you have to think 10 years ahead and I don’t like what I see.
Terms matter. Socialist, not communist. And not a very good socialist at that.
Socialism is a gateway drug to communism. Drugs matter.
What was the generation who voted for both Wilson and FDR called?
Or FDR and LBJ?
Count me in for a Class Action lawsuit against Trump.
Coffee just went up by .50 at our local diner where the farmers stop for a visit after chores. The conversation lately has been all about the price of diesel, gasoline and coffee in light of falling corn and soy prices…
Yes some of the good ol boys are seeing the freight train of Trumpflation in the tunnel heading at them now.
Yesterday, walking out the door, the police chief said to me under his breath: “your smarter than I thought, you saw this coming all along”.
me: “Well chief? Last term we got bailed out, I don’t think it will be much different this time.”
I best let the others do most of the talking for a few months. Temperature is rising in the heartland in more ways than the heat!
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“me: “Well chief? Last term we got bailed out, I don’t think it will be much different this time.”
If there is one thing I hope dems do when they take power is f*## the farmers and end their subsidies as payback for voting for the current turd in office. They never vote for dems anyway because their religious textbook provides them all they need so cut them off and let their magic book save them.
I have to agree with you. It is a scary group to work with as people that get it can’t really speak on the subject without being ostracized. I do ask a few questions to get them thinking and set a unique example in my farming methods.
I vent on this site so my head doesn’t explode…
NO political signs EVER on my properties!
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Where would you get your food then? Or are you prepared to pay vastly higher prices since the subsidies would be ended?
Vastly higher prices? Where are the farmers subsidies coming from? taxes? yeah I pay over 100k every year in taxes so maybe from those savings I can afford higher food prices.
The world makes plenty of food and it’s cheap. I can get 10 avocados in Ecuador for $1 where they are $1 each here. It’s policy and politics that keep food prices high for Americans.
But the real answer is that those farms would be taken over by corporations who don’t give a flip about religion and “social” issues. They only care about efficiency and profits. It’s a win-win for everyone except the dimwits.
Farmers are damn hard workers and typically are at the mercy of the weather. Some places in eastern MT are seeing horrible wheat & bean crops. Corn seems to be having a bumper year with prices projected to fall below break-even. I’m not a farmer. I don’t know any farmers. I respect the hard work they do to put food on our tables.
Corn ethanol subsidies need to end.
And this E15 mandate that none of my current Toyotas will run on. E15 crossed out on the gas cap warning “do not use”.
The village police chief: idiot, u are smarter than I thought.
Washington D.C. or Cincinnati?
Terrible news about arabica coffee. The prices are only going to get worse for quite some time until the fungus issues are resolved. There’s a real supply problem.
Paid today $2.50 a gallon for gas using Circle K 25 cents a gallon discount and that does not include Upside app discount (5 cents a gallon) also at the Circle K gas station in Florida.
Gas prices have steadied below $3 a gallon, just like annual inflation has remained below 3% for at least the last 12 months.
Trump is doing what is right for the country. The low inflation we had since the 90s was the result of free trade policies which hollowed out our industries and left the country with massive debt. America would have a hard time defending itself in a large war. Those free trade policies destroyed America and need to be reversed with tariffs. Get use to inflation.You have to protect your personal finances from inflation with real estate and other real assets.
Bullshit.
Ok, but the status quo before Trump was not working and part of the problem for years and bi partisan.
So what do you suggest? I have had it with Trump is this Trump is that
We need solutions not more complaining
And what happens if it doesn’t work?
Tariff harder?
I asked for some suggestions for solutions, did I not? And I never said it would work but I do believe no matter what we do short term pain is the least of what is going to happen
The status quo is not working.
I like most of mikes ideas
But your response, was once again basically an attack on anything trump without offering some solutions or suggestions.
As an increase in bank CDs decreases gdp, so a decrease in bank CDs increases gdp. Go fish!
Ok, here’s an idea, end all tariffs immediately.
… and put all those pedophiles in prison where they belong.
Oh, and go back to the status quo.
No thanks.
That’s not a solution. The status quo will let China become stronger & stronger.
Simp harder.
Maybe start with a balanced budget and any additions get added to individual taxes the following year.
Solutions?
There are 3 simple and easy solutions but they will never be done voluntarily because no one wants to give up anything therefore they will be taken away involuntarily anyway when the system crashes.
It’s pain now or pain later and everyone votes for pain later.
Trump hasn’t done a single damn thing to make anything better. Where’s the golden age we were promised?
Those solutions would cause an economic collapse.
Well the thing is, every solution causes an economic collapse because everyone wants a free lunch and there’s no such thing, there’s always a bill that comes due.
So we live in a world where someone somewhere is always stealing someone else’s lunch. I’m sick of having thousands taken from my paycheck to pay for everyone else’s lunch, retirement, healthcare, etc.
It is possible that the tariff approach leads to moderate inflation with slow growth … for years. You can call this stagflation for years and years. That is better than a collapse.
There is no easy answer. I have not heard a better solution, but I am all ears.
All he’s got is doom & gloom. He doesn’t have real solutions.
Well, you need to move abroad to somewhere you can gain citizenship & pay less taxes. Not sure where that is, because you’re babbling nonsense.
SS & Medicare aren’t going anywhere. BUT THE FACT is that there’s enough waste & abuse in the system to really get the ship moving in the right direction, if it were identified & cut. Granted, that’s a lot of free lunches being cut, but that’s a big part of the solutions and won’t be easy.
It won’t be easy, but at least Trump is starting to point the ship in that direction. Tariffs are a part of the solution. Trump just has to figure out what the right amount is for the big ones:
China, MX, CA, EU, JAP, & SK which he’s starting to do.
You’re an extremely doom & gloom person, which is fine. I disagree. There is a path towards a better future, but one thing is for sure, it’s NOT MAMDANI.
F that guy.
What do you think is happening now?
Early states of low growth with inflation. White collar hiring has already slowed.
Our military will be crippled soon because Trump failed to stockpile rare earths before starting his trade war.
Trump literally handed China and Russia the upper hand.
Only an idiot or a president that was working for other interests than the US would do that. Oh that’s right he is meeting with his buddy Putin to discuss the division of the Ukraines waterfront properties.
One for Trump, One for Putin, One for Trump, One for Putin…
Defending a pedophile is pretty low Jim…
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Rare minerals productions were shift by the globalists to China decades ago.
So bright guy, why didn’t Trump start to stockpile these items 9 years ago if he is playing 5D chess?
At some point you have to get it, Trump is working for Trump. He is not doing a damn thing to make America stronger or financially better off.
Destroying long term relationships and trade is not helpful!
Gotta tend to the bees now. See ya later!
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Virtually every single utterance Trump has ever made on trade is false. And industries are not hollowed out. Unemployment is 3% and the US is the 2nd largest exporter in the world.
You know how you hollow out an industry? Increase the price of their raw materials by 50%.
Or spike inflation by forcing interest rates down while prices rise.
All politicians are imbeciles but Trump is the most spectacular of economic illiterates I’ve ever seen–and that’s a high bar.
When is the last time you been to Detroit? It is a shell of it’s past, hollowed out by free trade.
And just wait to see what happens when the cheap Chinese EVs make it ashore here in the US. Detroit will become Somalia.
Why Trump’s second trade war could be worse for US farmersHigher tariffs on nearly all major U.S. trading partners are piling pressure on farmers already struggling with soaring agricultural supply costs and elevated rates
https://missouriindependent.com/2025/06/30/why-trumps-second-trade-war-could-be-worse-for-us-farmers/
Pretty good article and the states noted are the ones with the much higher diesel prices because of the Canadian tariffs. Fails to mention that 90% of our potash comes from Canada and Russia. Now that the tariffs are in force we have the real dislocations starting to show up and in conjunction with our cargoes of corn and soy being rejected by China it is game on.
I am heading up to Canada to look at some land this fall where the fires have killed the trees but left them harvestable and if the land is cleared, some of it will become prime cropland.
The dollar remains strong and opportunity knocks.
Trump is an idiot and pedophile!
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No thanks! They have six subtopics at the top of the page.
#1 is Cannabis.
They’re a liberal, socialist paper.
Welcome to the “Dark Ages of Trump”
Big Beautiful Inflation
We are going to see the US version of ‘Shanghai Statics’ coming soon. President Trump doesn’t like to be contradicted hence the people in the system will show him the data that they think he wants to see.
The time is not very far off when we are going to have to rely on other statics e.g. electricity generation to see what the US economy is actually doing.
I can see rapid inflation, which shocks the market, followed by rapid deflation.
that is possible
So is slow stagflation
It’s like being stuck between the rails in front of an oncoming train.
Or was it a deer in the headlights?
Is the damage done permanent?
If not, time to repair?
Lisa_Hooker,
As an European I would have to say that the damage to US’s reputation is permanent and the longer it goes on the less reversable it becomes.
The situation may improve after the civil war, dependant upon the side that wins.
The side with more guns, ammo & military training will prevail.
have any specifics in mind? or just content to throw shade from ‘Europe’