Welcome to Seeking Alpha's Wall Street Lunch, our afternoon update on today's market action, news, and analysis.

Good afternoon, today is Thursday, August 14th, and I'm your host, Kim Kahn. Our top story so far,

just when you thought it was safe to go back into the waters of monetary easing, wholesale inflation comes in with a blistering rise.

The July producer price index rose 0.9% month-over-month, miles ahead of the 0.2% increase

expected, and June's unrevised flat reading. That's the biggest monthly rise in headline

PPI in three years. The annual rate jumped to 3.3%, well above the 2.5% consensus, and 2.4% in the earlier month, revised from 2.3%.

That's the largest increase since February's 3.4% rise.

Stripping out food and energy costs, core PPI also jumped 0.9% for the month versus the 0.2 percent consensus and flat prior. The core measure climbed

3.7 percent year on year versus 2.9 percent consensus and 2.6 percent in the previous month.

The key takeaway from the hot PPI data is that U.S. corporate margins are going to thin,

which creates the conditions for inflation to be passed along downstream to American households,

said economist Joseph Brasawales. Within final demand, over three quarters of the broad-based increase in

July can be traced to the index for final demand services, which jumped 1.1%. On services

PPI, more than half of July's increase was attributable to margins for final demand trade services,

which surged 2%. Some 30% of last month's advance in services prices can be traced to margins

for machinery and equipment wholesaling, which jumped 3.8%. Producers have increased prices above

costs, which means they have room to pass on the cost of tariffs down to buyers, Renaissance

Macro said.

Callie Cox of Ritzholt Wealth says,

companies are passing along current and future costs.

Inflation heat has spread to services prices.

A September rate cut is not a done deal.

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