- The Producer Price Index (PPI) for final demand was flat in July (0.0% on the month, seasonally adjusted) and is up 4.7% over 12 months. The core index — which excludes foods, energy and trade services — rose 0.4% on the month and also 4.7% over 12 months (Chart 1).
- Both measures have eased from their recent peak (close to 6% in mid-2026), but each remains around 4.7% — well above the pace consistent with the 2% target, a sign that cost pressure at the wholesale level persists (Chart 1).
- On the month, final demand goods fell 0.7%, with gasoline down 5.7% and truck freight 1.8%. On the services side (+0.2%), the main upward driver was portfolio management (+6.5%), a volatile item tied to financial market performance.
- Import prices fell 0.4% in July (after -0.3% in June) but are up 5.9% over 12 months. The monthly decline came from fuel (-7.2%, the largest since May 2025; +25.2% over 12 months); excluding fuel, import prices rose 0.4% on the month and are accelerating to 4.5% over 12 months, suggesting persistent pressure from tariff policy (See Chart 2).
- The divergence is telling: while oil drags the headline indexes down in the short term, the core measures — both the PPI core and import prices ex fuel — remain firm.
- For monetary policy, the picture is ambiguous: the well-behaved headline PPI offers some comfort, but the stickiness of the producer and import cores suggests that part of the disinflation still depends on a truce in energy prices — a relief that could reverse. The Fed should stay attentive to this pass-through before accelerating rate cuts.
