U.S. wholesale inflation in July came in better than expected
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Wholesale prices in the U.S. remained unchanged in July, according to a new report from the U.S. Bureau of Labor Statistics on the PPI (Producer Price Index). Analysts had expected a 0.2% increase, according to CNBC. Meanwhile, the data for June was revised: the index fell by only 0.1% that month, instead of the previously reported 0.3% decline.
The core wholesale inflation index, which excludes volatile food and energy prices, rose 0.2% in July, compared with a consensus forecast of 0.3%.
On a year-over-year basis, the overall PPI rose 4.7%, while the core PPI rose 4.2%.
This data is particularly important because some of the components of the index are used to calculate the Federal Reserve’s preferred measure of inflation—the Personal Consumption Expenditures (PCE) price index— as explained by The Wall Street Journal.
The report was released the day after the publication of another inflation indicator—the Consumer Price Index (CPI)—which also did not present any unpleasant surprises to the market. In July, the CPI rose 0.1% from the previous month amid falling energy prices, which helped ease price pressures, according to CNBC. The core CPI rose 0.2%. All the figures were fully in line with analysts’ expectations. Nevertheless, the annual inflation rate still significantly exceeds the U.S. Federal Reserve’s target: 3.4% versus 2%.
Both reports confirmed that, following the surge in inflation at the start of the year—triggered by the war in Iran and Donald Trump’s tariffs—the pace of price increases is beginning to slow, according to CNBC.
How did the market react?
Following the release, S&P 500 futures rose 0.2%, Nasdaq Composite futures edged lower, and Dow Jones futures rose 0.3%. At the opening bell, all three indices jumped, with the Nasdaq Composite posting the largest gain.
The subdued inflation data further eased concerns about an imminent interest rate hike. According to the FedWatch tool, the probability of a monetary policy tightening at the upcoming Federal Reserve meeting in September has fallen from 40% to 32.4%.
“Nevertheless, the most likely scenario is still considered to be a rate hike in either October or December—after the Fed’s leadership takes a pause to assess the situation on both sides of the central bank’s dual mandate (keeping inflation in check and maintaining a stable labor market — Oninvest),” Jose Torres, senior economist at Interactive Brokers, told CNBC.
This article was AI-translated and verified by a human editor
