US PPI in Focus, What’s Next?
The July 2025 U.S. Producer Price Index (PPI) is stealing the spotlight today, and Wall Street’s watching closely. Economists expect wholesale prices to tick up 0.2% month-over-month and roughly 2.4% year-over-year, a small move but one that could ripple through markets, inflation expectations, and the Fed’s next big decision.
PPI tracks the prices producers get for their goods and services—basically the pipeline before costs hit consumers. If wholesale prices climb, consumer prices often follow.
Goldman Sachs estimates U.S. companies have eaten up to 64% of tariff costs so far, but that cushion may not last. If they start passing those costs along, inflation could reheat faster than the Fed would like.
Analysts see both headline and core PPI (excluding food and energy) rising 0.2% MoM, with core up about 2.9% YoY.
The Bureau of Labor Statistics recently cut around 350 industry indexes—less than 1% of total PPI coverage—due to budget and survey constraints. Officials say the impact on inflation tracking, including PCE (the Fed’s favorite gauge), should be minimal.
Traders have been betting big on a Fed rate cut in September, with some even calling for a 50 basis-point move. A hotter-than-expected PPI could cool that enthusiasm and push rate-cut bets further out.
Futures slipped slightly ahead of the release, signaling caution. Strong numbers might tighten financial conditions, while a softer read could cement expectations of easier policy ahead.
Snapshot: The Numbers to Watch
| Metric | Expected |
|---|---|
| Headline PPI MoM | +0.2% |
| Headline PPI YoY | 2.4% |
| Core PPI MoM | +0.2% |
| Core PPI YoY | 2.9% |
What Happens Next
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Immediate Reaction – Markets will likely swing within minutes of the release.
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Fed Watch – PPI is an appetizer; the main course is August 29’s PCE data, which will either confirm or contradict today’s signal.
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Tariff Flow-Through – If tariffs start hitting consumer prices directly, the inflation story could shift quickly, forcing the Fed’s hand.
Today’s PPI release may not look huge on paper, but it’s a key puzzle piece in the broader inflation picture. A surprise on the upside could keep the Fed in wait-and-see mode; a softer print might green-light those rate cuts investors are craving.
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