HVAC wholesale prices inch up in July, reach all-time high

A figure that shows how U.S. wholesale prices of HVAC equipment have changed over time hit its highest level ever in July, new data shows.

What’s happening: The Bureau of Labor Statistics on Thursday released last month’s ‘producer price index’ (PPI), which measures the average change in selling prices that domestic manufacturers receive for their products. 

• Industry-specific indexes are also published, including “air conditioning, refrigeration, and forced air heating equipment,” which grew 5.2 percent year-over-year to an all-time high. 
• Compared to July 2020, the figure is up 52 percent. 

Why it matters: Because the PPI measures wholesale price changes — before they reach consumers — it’s widely seen as a leading indicator of inflation. 

• Across all industries, the index in July rose 0.9 percent, the fastest pace in three years and much higher than the 0.2 percent that economists had expected. 

What they’re saying: “This is a kick in the teeth for anyone who thought that tariffs would not impact domestic prices in the United States economy,” Carl Weinberg, chief economist at High Frequency Economics, told Reuters. 

• Yes, but: “We had heard the A2L [equipment] would cost more than the 410A, so we were expecting this PPI trend,” HARDI analyst Brian Loftus told Homepros in an email. 

What to watch: “While businesses have assumed the majority of tariff costs increases so far,” said Ben Ayers, senior economist at Nationwide, “We expect a stronger pass through of levies into consumers’ prices in [the] coming months.”

• August’s producer price index will be released on September 10.