The July PPI indicates companies are adjusting their pricing of goods and services to help offset costs associated with higher U.S. tariffs.

Economic data is finally catching up to the economic reality that U.S. businesses and consumers have been describing for months.

Consumer spending came in much higher than expectations, but because the figures aren’t adjusted for inflation, the increase could indicate either more sales volume or higher prices.

Although tariffs’ impact on consumer prices has been modest thus far, “the day of reckoning is finally upon us, and many [U.S. businesses] are planning price adjustments this summer, likely beginning in July.”

Still, the U.S. core CPI rose by less than expected in June, thanks to falling prices on both new and used cars.

The core CPI rose just 0.1% from April to May and 2.8% from a year ago.

However, revised government numbers for Q1 indicate stronger business investment and a greater accumulation of inventories than initially reported.