US PPI Inflation Cools to 2.3% in June, Missing Expectations

US PPI Inflation Cools to 2.3% in June, Missing Expectations

The US Producer Price Index (PPI) for June 2025 came in softer than anticipated, rising 2.3% year-on-year, according to the Bureau of Labor Statistics. This marks a deceleration from May’s 2.6% increase and comes in below the market forecast of 2.5%.

On a monthly basis, both the headline and core PPI figures were flat, pointing to subdued cost pressures at the producer level. The core PPI, which excludes food, energy, and trade, rose 2.6% annually, down from 3.0% the previous month.

Market Reaction: US Dollar Index Slightly Lower

Following the release, the US Dollar Index (DXY) dipped slightly and is now trading near 98.50, as markets interpret the softer PPI print as a potential relief on inflationary pressure. This may give the Federal Reserve (Fed) some breathing room as it continues to assess the path of interest rates amid tariff-induced price pressures.

Key Takeaways:

• Headline PPI (YoY): 2.3% (vs 2.5% expected, 2.6% prior)
• Core PPI (YoY): 2.6% (vs 3.0% prior)
• PPI (MoM): 0.0%
• Core PPI (MoM): 0.0%

Fed Policy Outlook and Market Sentiment

While June’s Consumer Price Index (CPI) had already shown signs of inflation stickiness, this PPI cooling supports the Fed’s cautious stance on rate changes. With the latest Fed Beige Book and Industrial Production figures also on the radar, investors remain alert to shifting signals in the broader macroeconomic landscape.

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