Wholesale Prices

The U.S. Producer Price Index (PPI) for final demand goods (e.g., CPG products, raw materials) and services (e.g., transportation, warehousing) unexpectedly dropped 0.1% in August after rising 0.7% in July and 0.1% in June. For the 12 months ending in August, the PPI rose 2.6%.

The PPI reflects wholesale prices and is a leading indicator of future inflation at the retail level. Since the August PPI shows minor inflation, most economic observers believe it gives the Federal Reserve more impetus to cut interest rates.

Berlin Packaging maintains a best-in-class approach to sourcing packaging materials and manufacturing platforms. We are not bound to a specific material, technology, tool, or country of origin, affording us tremendous flexibility to find the most cost-effective packaging solutions for our customers.

Although Berlin Packaging cannot control the price of raw materials, we do offer multiple value-added services and income-boosting solutions to help our customers Package More Profit. Over the past few years, Berlin Packaging has added more than $200 million in profit to our customers as a unique benefit of doing business with us.

As the third quarter winds down, U.S. consumer spending remains resilient in the face of a weak jobs market and tariff-driven price increases. Here's a snapshot of recent economic activity, data, and news influencing the consumer packaged goods (CPG) market and the packaging industry in North America.

• U.S. consumer spending rose 0.6% in both August and July.
• Consumer sentiment slid by nearly 5% in September, marking two months of decline.
• On an annual basis, U.S. and Canadian inflation are 2.9% and 1.9%, respectively.
• The U.S. Fed cut interest rates by 0.25% in September, the first reduction in 9 months. 
• In Q2, U.S. GDP rose to 3.8%, while Canada's GDP dropped 0.4%.
• A ho ho ho or ho-hum holiday retail season?

Consumer Spending and Sentiment

U.S. consumer spending and retail sales increased by 0.6% month-over-month (MOM) in both August and July. Online shopping (2.0%), clothing store sales (1.0%), sporting goods, hobby, and bookstore sales (0.8%), and food services and drinking places (0.7%) led the August advance. Purchases of back-to-school supplies and apparel for the new school year lifted August retail spending.

Food and beverage store sales increased by 0.3% in August, following a 0.5% improvement in July. Health and personal care store sales declined by 0.1% in August, following a 0.4% gain in July. Building materials and garden supplies stores recorded a 0.1% sales rise in August after a 0.9% drop in July.

In Canada, consumer spending and retail sales expanded by 1.5% in June, driven by gains at food and beverage retailers, according to data from Statistics Canada. Retail sales increased by 0.4% in the second quarter. Statistics Canada projects retail sales will decrease by 0.8% in July.

Consumer sentiment — a measure of how U.S. consumers view their finances and the economy — slid nearly 5% in September, mostly driven by low and middle-income consumers, according to the University of Michigan consumer sentiment survey. The September pullback marked the second consecutive monthly decrease, pushing sentiment to its lowest level since May.

Consumers continue to cite multiple weaknesses in the economy, with rising risks to business conditions, labor markets, and inflation. Views about personal finances receded by 8% in September, while year-ahead inflation expectations held steady at 4.8%, unchanged from August.

Berlin Packaging's mission is to improve our customers' net income through our packaging products and services. We help to increase their sales, reduce costs, and/or improve productivity. Along with having a positive impact on their income, we are committed to providing accurate and timely information and products.

Inflation Up, Interest Rates Down

The U.S. consumer price index (CPI) rose 0.4% MOM in August after increasing by 0.2% in July, according to the Bureau of Labor Statistics. The August inflation figure was the highest since January, driven by increases in food-at-home (0.6%), gasoline (1.9%), and shelter (0.4%). On an annual basis, the CPI rose 2.9% for the 12 months ending in August.

The annual inflation rate in Canada climbed to 1.9% in August, up from 1.7% in July, according to Statistics Canada. The CPI declined 0.1% MOM in August, following a 0.3% increase in July. Lower gasoline and fresh fruit prices contributed to the CPI decline in August.

At its September meeting, the U.S. Federal Reserve reduced interest rates by 0.25% to settle at 4.00% – 4.25%, its first rate cut since December 2024. The rate reduction was influenced by a soft labor market. The U.S. central bank indicated it expects to cut interest rates two more times this year.

In Canada, the Bank of Canada reduced its benchmark interest rate by 0.25% to 2.5% in September due to a weakening labor market and a slowdown in inflation.

A Ho Ho Ho or Ho-Hum Holiday Spending Season? 

Early signs point to a ho-hum holiday retail season, with spending falling to pandemic levels. Shoppers expect their seasonal spending to decline on average by 5% from 2024—the first notable drop since 2020, according to PwC's 2025 Holiday Outlook survey. The "tree trimming" is driven by Gen Z, who expect to slash holiday spending by a whopping 23%. By contrast, millennials, Gen X, and baby boomers expect to maintain or even increase their holiday purchases.

The one bright spot for holiday spending is travel and entertainment (e.g., food and drinks), expected to increase by 1% compared to last year.

More broadly, the PwC consumer survey reveals that over 80% expect to cut back in general over the next six months, especially on dining out (52%), clothing (36%), and big-ticket items (32%). During the approaching holiday season, over 50% say that general price increases will likely affect their spending decisions this year. 

According to Deloitte's annual holiday retail forecast, sales are likely to increase between 2.9% and 3.4% in 2025. Last year, holiday sales increased by 4.2%. This year's forecast projects holiday retail sales to grow at their slowest pace since 2018.

Deloitte predicts e-commerce sales to increase between 7% and 9% during the upcoming holiday season, while in-store purchases are projected to rise between 2% and 2.2%, a pullback from the 3.4% growth seen a year ago.

"We anticipate disposable personal income (DPI), a key driver of retail sales, to grow between 3.1% to 5.4% this holiday season. Our research indicates that DPI is a sound predictor of retail sales and e-commerce sales," noted Akrur Barua, economist, Deloitte Insights.

As the world's largest Hybrid Packaging Supplier, Berlin Packaging continually tracks consumer behavior, product trends, macroeconomics, geopolitical events, global trade policies, and packaging innovation to fully understand what is happening in the market so we can best help our customers succeed.

Following peak season this summer, U.S. import cargo volumes at the nation's major container ports are expected to steadily decline for the remainder of the year amid tariff fluctuations, according to data from the National Retail Federation (NRF) and Hackett Associates.

"Retailers have stocked up as much as they can ahead of tariff increases, but the uncertainty of U.S. trade policy is making it impossible to make the long-term plans that are critical to future business success," stated NRF Vice President for Supply Chain and Customs Policy Jonathan Gold. "These tariffs and disruptions to the supply chain are adding costs that will ultimately lead to higher prices for American consumers."

Ocean carrier schedule reliability dipped by 2.2% in July to 65.2%, the first decline since January, according to data from Sea-Intelligence. The average delay for late vessel arrivals increased to 4.68 days in July.

With China's Golden Week holiday (October 1–8) right around the corner, blank sailings (i.e., voyage cancellations or changes to ports of call) on most trade lanes are expected to increase as Chinese factories and logistics businesses close for an extended time. From mid-September through mid-October, carriers plan to cancel 12% of their scheduled sailings, with nearly half on Asia-North America eastbound routes, reports Drewry Container Capacity Insights.

As volatility persists in many global trade lanes, Berlin Packaging proactively provides alternate routings and real-time visibility of the international freight market to help our customers minimize any disruptions to their supply chains. Our long-standing carrier partnerships with dynamic pricing and adaptable agreements mitigate market fluctuations.

Import Volumes Follow Tariff Activity

In August, U.S. container import volumes recorded the second-highest monthly total this year, according to data from Descartes. August imports increased 1.6% compared to August 2024. Despite elevated throughput, port transit delays moved only modestly, indicating that U.S. infrastructure continues to handle heavy volumes more efficiently than in past periods of comparable demand. 

Port Activity

In July, container import volumes at the Port of Los Angeles surged 8% YOY and were the most imports ever in a month at the 117-year-old port. For the first seven months of the year, the Port of LA handled 5% more imports and exports than in the same period in 2024.

At the nearby Port of Long Beach (LB), the 114-year-old port recorded its busiest July ever and the third busiest month in its history. Port activity remained strong the following month, with the second-busiest August on record. Through the first eight months of 2025, the LB port processed 8.3% more containers than during the same period last year.

In Europe, labor strikes and shortages, the recent summer holiday season, and a surge in imports from Asia have resulted in congestion at several ports in Belgium, France, Germany, and the Netherlands. These port bottlenecks have also stressed other transportation systems, including trucking, rail networks, and barge traffic.

As a Customs-Trade Partnership Against Terrorism (C-TPAT) certified importer, Berlin Packaging and our customers reap multiple benefits, such as reductions in customs freight examinations, "front of the line" status during inspections/exams, and streamlined processes to prevent delays.

Despite sluggish freight demand, transportation costs in North America have continued to rise by small monthly increments this year. For example, in July, freight shipments fell 6.9% YOY and dipped 1.8% MOM, while freight expenditures rose 0.4% YOY, according to the Cass Transportation Indexes.

July's YOY increase marks the fourth straight month of expenditure improvements following over two years of declines. Meanwhile, the MOM drop in shipments reflects rebalancing from the tariff-driven stock buildup earlier in the year.

The August Logistics Managers' Index report revealed upward pressure on inventory, warehousing, and transportation prices. Inventory levels are increasing while warehouse capacity is slowing, resulting in higher costs. Logistics professionals anticipate transportation prices to increase over the next 12 months, placing additional pressure on shippers' budgets.

Berlin Packaging's Logistics Team bridges the gap between sales, procurement, suppliers, and operations, ensuring seamless shipment execution tailored to customer needs.

Diesel Fuel Prices Rise

Following a four-year low (i.e., $3.45 per gallon) in early June, U.S. diesel fuel prices have risen steadily over the summer and stood at $3.73 per gallon in mid-September—a 21-cent increase compared to last year. During the third quarter, Middle East conflicts and lower global diesel inventories elevated fuel prices. Diesel's steady climb signals continued cost pressure for freight shipments and budgets.