The latest data on the US Producer Price Index (PPI) is shocking. The PPI in July rose by 3.7% year-on-year, a significant increase of 1 percentage point from the previous value, far exceeding expectations. This data will undoubtedly give the Fed chairman a headache and may even prompt a reconsideration of interest rate hike decisions.

What further worries the market is that inflationary pressures may intensify in the future. Considering that a new round of tariff measures will start to be implemented in August, next month's PPI data is likely to continue to rise, and this possibility should not be underestimated.

Some may wonder why the Consumer Price Index (CPI) released on Tuesday performed modestly, while the Producer Price Index (PPI) on Thursday was so astonishing? This is because the PPI reflects production-side costs, while the CPI reflects consumption-side prices. As a leading indicator, the PPI often reflects economic changes earlier and more sensitively. Rising production costs typically gradually transmit to the consumption side, leading to an increase in the CPI. Therefore, the CPI may show an upward trend in the coming months.

This series of data reveals that the inflationary pressures facing the US economy are intensifying. Policymakers need to closely monitor this trend and weigh the balance between inflation risks and economic growth. At the same time, investors and consumers should also pay attention to changes in this economic indicator to prepare for potential economic fluctuations.