January PPI Rises: Supply Chain & Tariff Pressures Fuel Inflation
January’s Producer Price Index (PPI) came in higher than anticipated, signaling continued, if shifting, inflationary pressures within the U.S. Economy. The Bureau of Labor Statistics (BLS) reported a 0.5% increase for final demand in January, with the 12-month rise reaching 2.9%. Although the headline figure suggests persistent price increases, a closer look reveals a divergence between goods and services, and highlights the growing impact of supply chain dynamics and tariff uncertainty on businesses.
The increase was largely driven by services, which advanced 0.8% in January. Within services, trade margins – the difference between wholesale and retail prices – saw a significant jump of 2.5%. This indicates that distribution layers within supply chains are absorbing or expanding markups, even as the costs of some goods inputs have begun to moderate. This dynamic suggests that cost pressures are not simply originating at the producer level, but are being amplified as products move through the supply chain.
Tariffs and Global Supply Chains Intensify Risk
For middle-market firms, this pricing volatility coincides with heightened policy uncertainty, particularly surrounding tariffs and global trade. Recent sentiment data indicates that executives are grappling with unpredictability across key areas, including supply chains, payments, and liquidity. Goods-producing firms are experiencing particularly acute strain, with nearly three in ten Chief Financial Officers (CFOs) in that sector reporting high levels of uncertainty.
A critical factor driving this uncertainty is a company’s supply chain exposure. Firms relying solely on domestic suppliers report a relatively low level of uncertainty, with 18% of CFOs expressing concern. However, that figure nearly doubles to 33% for firms sourcing 40% or more of their supplies from overseas. This underscores the vulnerability of businesses with complex, international supply chains to disruptions and cost increases.
confidence in adapting to tariff-related disruptions is strongly correlated with overall uncertainty. CFOs lacking confidence in their ability to navigate tariff changes report high uncertainty at a rate of 54%, compared to just 17% among those expressing at least some confidence. This suggests that proactive planning and risk mitigation strategies are crucial for managing the impact of trade policy.
Cash Flow Certainty as a Supply Chain Stabilizer
In response to these challenges, businesses are increasingly focused on adjusting the mechanics of their supply chains, rather than simply raising prices. Data from the 2025-2026 Growth Corporates Working Capital Index, a collaboration between PYMNTS Intelligence and Visa Acceptance Solutions, shows that 85% of U.S. Growth corporates – middle-market firms – are utilizing working capital solutions.
The Index score rose to a North American average of 55 in 2025-26, up from 52 the prior year. This improvement is linked to stronger cash flow visibility and more strategic deployment of liquidity. Unpredictable financing needs have declined, and the leverage of early invoice payments is increasing. In Canada, for example, 41% of firms now utilize early invoice payments, up from 34% the previous year. Paying suppliers earlier can secure favorable terms and strengthen relationships during periods of supply constraint.
The adoption of artificial intelligence (AI) for working capital efficiency is as well gaining momentum, reaching 42% across North America. Firms are leveraging predictive analytics to model demand fluctuations, anticipate tariff exposure, and synchronize payables with receivables. These capabilities enhance supply chain resilience by reducing informational gaps and improving forecasting accuracy.
Commercial and virtual cards are also becoming more prevalent. In Canada, the use of these cards by middle-market firms increased from 7% in 2024 to 17% in 2025. Businesses cite streamlined workflows, reduced operational burdens, and improved approval controls as key benefits. Card-based payments can facilitate prompt settlement without straining liquidity, helping firms maintain supplier stability even as producer prices fluctuate.
Consumer Behavior Adapts to Supply Chain Costs
The impact of supply chain disruptions and rising prices is also being felt by consumers. Research indicates a shift in household financial behavior, with increased reliance on installment plans to manage expenses. The February 2026 Pay Later Ecosystem Report shows that 45% of millennials and 42% of bridge millennials have used credit card installment plans in the past three months, while a quarter of each group have utilized Buy Now, Pay Later (BNPL) services. Among consumers living paycheck to paycheck, the figures are 36% for credit card installments and 18% for BNPL.
These trends suggest that households are actively seeking ways to smooth cash flow in response to pricing variability, which often originates upstream in the supply chain. The January PPI data underscores how volatility travels through the supply chain, how tariff exposure amplifies risk, and how effective liquidity management can mitigate the speed at which upstream costs are passed on to consumers. The data released on , by the BLS, provides a clear illustration of these interconnected dynamics.