The surge in services costs seems to be a bit of a surprise (?):

> Services inflation provided much of the push higher, moving 1.1% higher in July for the largest gain also since March 2022. Trade services margins rose 2%, coming amid ongoing developments in President Donald Trump’s tariff implementations.

> In addition, 30% of the increase in services came from a 3.8% increase in machinery and equipment wholesaling. Also, portfolio management fees surged 5.8% and airline passenger services prices rose 1%.

* https://www.cnbc.com/2025/08/14/ppi-inflation-report-july-20...

> The government on Tuesday reported a mild increase in consumer prices in July, though rising costs for services like dental care and airline tickets caused a measure of underlying inflation to post its largest gain in six months.

> While financial markets have priced in an interest rate cut from the Federal Reserve next month, rising services inflation and the expectation tariffs could still significantly boost goods prices left some economists doubtful of a resumption in policy easing in the absence of labor market deterioration.

* https://www.reuters.com/world/us/us-producer-prices-accelera...

When it comes to (Fed) policy, the other thing they look at besides inflation/PCE is employment, which appears to be softening (see recent revisions which caused recent Trump-BLS turmoil).

The US risk for stagflation seems to be growing:

* https://www.investopedia.com/terms/s/stagflation.asp

* https://en.wikipedia.org/wiki/Stagflation

* https://paulkrugman.substack.com/p/its-beginning-to-smell-a-... (check out the music video link at the end)

The current policies seem almost designed for that. Choke real growth with unpredictable tariffs and print lots of money.