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Business & Economy
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Business & Economy
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Inflation spike backs Fed into corner on key decision
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Wholesale prices increased in July at the quickest pace since February, putting the Federal Reserve in a tough position as it faces pressure to keep prices low and employment high.
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The 3.3 percent yearly increase — which blew past economists’ expectations — comes as economists are keeping a sharp eye on inflation data amid President Trump’s trade war.
The Labor Department’s producer price index (PPI), which measures prices that businesses charge one another before determining the final sales price they charge to consumers, advanced by 0.9 percent from June to July, marking a 3.3 percent increase on the year, the Labor Department reported Thursday.
That’s the sharpest increase in five months, more than quadrupling economists’ expectations for a 0.2 percent increase on the month. Removing the more volatile categories of energy and food, the “core” PPI advanced by 0.6 percent on the month, the fastest pace since 2022.
The surprisingly weak July jobs report also showed employment conditions are worsening, but upward-moving prices mean the Fed will have to negotiate stagflationary concerns in the short term.
Trump has been demanding rate cuts to spur the economy since the beginning of the year.
Cutting interest rates could help support the job market by easing borrowing costs for businesses. But doing so could also add fuel to inflation.
The Hill’s Tobias Burns has more here.
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Welcome to The Hill’s Business & Economy newsletter, I’m Aris Folley — covering the intersection of Wall Street and Pennsylvania Avenue.
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Key business and economic news with implications this week and beyond:
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Sen. Josh Hawley (R-Mo.) on Thursday raised the prospect of a congressional investigation into Meta, after a policy document from the tech giant reportedly suggested its artificial intelligence (AI) chatbot could engage in “romantic or sensual” conversations with children.
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President Trump signed a proclamation marking the 90th anniversary of the establishment of Social Security, while boasting changes in his recent tax law aimed at providing relief to seniors.
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Former National Security Adviser John Bolton said Wednesday that President Trump’s tariffs may push India further away from the U.S. and into deeper alliances with Russia and China.
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It’s not a pandemic stimulus check, but Congress is currently weighing the possibility of sending the American people more money.
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Upcoming news themes and events we’re watching:
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The Bureau of Labor Statistics on Friday is set to release the U.S. Import and Export Price Indexes for July on Friday at 8:30 am E.T.
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Branch out with more stories from the day:
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NEW YORK (AP) — Most stocks fell on Wall Street Thursday after a disappointing report said inflation …
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Business and economic news we’ve flagged from other outlets:
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S&P 500 ekes out a third day of gains as traders shake off a hot inflation report (CNBC)
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McDonald’s and Wendy’s report breakfast sales are down. Here’s what that says about the economy. (CBS News)
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The White House reportedly discussing taking a stake in Intel, sending shares climbing (CNN)
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Opinions related to business and economic issues submitted to The Hill:
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You’re all caught up. See you tomorrow!
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