The U.S. Labor Department released data early on the 14th showing that the Producer Price Index (PPI) in the United States in July increased significantly, exceeding market expectations, indicating that the U.S. upstream industrial chain is facing a new round of inflationary pressure.

Data show that the producer price index rose by 0.9% month-on-month in July, significantly higher than the zero growth in June and the market expectation of 0.2%; this is the highest increase since June 2022. The year-on-year increase of the index was 3.3%, significantly higher than the 2.3% in June and the market expectation of 2.6%, reaching the highest level since February this year.

The Labor Department said that the rise in the producer price index in July was mainly driven by the service sector. The service sector's production price index rose by 1.1% month-on-month in the month, the largest increase since March 2022.

Excluding food and energy prices, the core PPI increased by 0.9% month-on-month in July, and by 3.7% year-on-year, significantly higher than the 2.6% year-on-year increase in the previous month.

After the data was released, the US stock market weakened, the US dollar and the yield on long-term US Treasuries rose. Analysts believe that the data released on the day shows that US companies are facing cost pressures and may further pass them on to the downstream.

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