US wholesale inflation held steady in June as tariff-driven goods price rises were offset by falling services costs—Dow and S&P futures ticked higher.
Table of Contents
📊 Overview
Despite new tariffs, the U.S. Producer Price Index (PPI)—the key measure of wholesale-level inflation—remained unchanged in June compared to May. Year-over-year, PPI rose 2.3%, slipping from 2.7% in May, signaling that rising goods costs were balanced by a drop in services prices.
🔍 Key Data & Market Reaction
- Monthly PPI: 0.0% change (below the +0.2% forecast)
- Annual PPI: +2.3% (down from +2.7% in May)
- Core PPI: Flat; annual rate of +2.6%, decelerating from +3.2%
- Market response:
- Dow futures: +0.37%
- S&P 500 futures: +0.21%
- Nasdaq 100 futures: +0.08%
⚖️ Causes Behind the Data
- Tariff-driven goods inflation: Continuing to press upward, particularly in goods tied to import tariffs.
- Weaker services prices: Notably in hotels, airlines, and auto dealerships—reflecting cooling demand
- Gas price rise: Largely offset by broader services decline
💡 Broader Context
- Tariff impact is gradual: Early signals from CPI show tariffs raising consumer prices (appliances, furniture, clothing), but PPI remains contained for now .
- Monitor future inflation: Services weakness may soften inputs to consumer level, while further tariff hikes set for August could lift goods inflation.
- Fed implications: The Fed likely to hold interest rates steady at 4.25–4.50% for now, balancing inflation risks.
🧭 What This Means for You
- Investors: Wall Street’s cautious optimism suggests lower short-term inflation, but watch for August tariffs and CPI releases.
- Consumers: Hold off on big purchases—tariff-induced price increases may soon filter through, despite current stability.
- Policymakers & businesses: Lag in services pricing gives central banks breathing space; but goods inflation remains a concern—supply chains and costs are being reshuffled.
✅ Final Take
June’s flat PPI offers temporary relief—tariffs haven’t immediately spiked wholesale inflation. But with additional duties looming in August, the real test lies ahead. Markets and policymakers will closely track upcoming PPI and CPI data to gauge the broader impact.
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