Here's what new data from the producer price index says about where inflation is headed, according to economists.

U.S. wholesale inflation surged unexpectedly last month, signaling that President Donald Trump’s sweeping taxes on imports are pushing costs up and that higher prices for consumers may be on

The cost of wholesale goods and services — where rising inflation tends to show up first — in July posted the biggest increase in three years, possibly heralding a sizable acceleration in price increases tied to higher U.

However, the Federal Funds Rate determines how much banks charge each other when they lend reserves overnight. So, changes (and expected changes) to Fed interest rates, and the resulting impact on the prime rate and Treasury yields, influence how much shoppers and businesses pay in interest and have left over to spend.

Wall Street is retreating from its record heights after a disappointing report said inflation was worse last month at the U.S. wholesale level than economists expected. The S&P 500 fell 0.4% in early trading Thursday.

U.S. stocks opened lower on Thursday after a reading on the July producer-price index came in much hotter than economists had expected. Although some pointed out that much of the increase was driven by services inflation,

Earlier this week, falling bond yields and growing expectations for aggressive Federal Reserve interest-rate cuts in the months ahead helped spark a rotation away from what had been working in the U.S.

The stock market’s rally stalled on Thursday after new data showed factory-gate inflation picking up, introducing fresh question marks over the outlook for interest rates. Major indexes finished mixed and near the flatline after investors bought the shares of big technology and financial companies and sold smaller stocks that had surged earlier in the week.

Wholesale inflation picked up more than expected last month, indicating that mounting pressure on input costs will likely translate into higher consumer prices before long.