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

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

The producer price index (PPI) for final demand rose 0.9% month-over-month after a flat reading in June. Core PPI, which excludes food and energy prices, rose 0.9% month-over-month after a flat reading in June. In July, the PPI for finished goods rose 0.5% month-over-month, up from 0.4% in June.

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.

US stocks managed to overcome a hotter-than-expected wholesale inflation reading on Thursday to notch another record high.

U.S. stock index futures slipped on Thursday after hotter-than-expected producer prices data contrasted with recent tame consumer prices data that had boosted bets of Federal Reserve interest rate cuts this year.