US Producer Inflation Flatlines in June 2025: Core PPI and Annual Rate Fall Below Forecasts

📌 Key Takeaways

• PPI unchanged in June vs. +0.3% in May
• Service prices fell 0.1%, led by sharp drop in travel accommodation
• Goods prices rose 0.3%, mainly due to communication equipment
• Annual PPI fell to 2.3%, lowest since September 2024
• Core PPI flat vs. expected +0.2%; annual core rate dropped to 2.6%

U.S. Producer Prices Show No Growth in June

The U.S. Producer Price Index (PPI) remained flat in June 2025 compared to May, according to the latest Labor Department data. This surprised analysts, who had expected a 0.2% increase, and signals easing inflationary pressure at the wholesale level.

The report comes on the heels of the consumer inflation data and adds weight to the case for potential rate cuts by the Federal Reserve later in the year.

Services Prices Dip, Travel Takes a Hit

Prices for services declined 0.1%, after a 0.4% increase in May. This was mainly driven by:

• 4.1% plunge in traveler accommodation services
• Declines in auto parts retailing, airline passenger services, and deposit services
• Lower prices for food and alcohol wholesaling

This drop in services suggests slowing demand in discretionary sectors, possibly tied to cautious consumer spending and trade uncertainty.

Goods Prices Rebound

Goods prices rose 0.3%, the biggest monthly gain since February, led by:

This bounce indicates ongoing volatility in energy and food-related sectors, but the increase was not strong enough to push the overall PPI higher.

📉 Annual PPI and Core Inflation Fall Sharply

The annual PPI dropped to 2.3%, its lowest level since September 2024, down from a revised 2.7% in May and well below forecasts of 2.5%.

The core PPI—which excludes food, energy, and trade services—was unchanged month-over-month, against expectations for a 0.2% increase.

The year-over-year core PPI fell to 2.6%, down from 3.2% in May, and below the forecast of 2.7%, confirming waning price pressure in underlying business inputs.

What This Means for the Federal Reserve

The weaker-than-expected PPI report supports the Fed’s cautious stance and may boost expectations for a rate cut in the fall—possibly as soon as the September meeting.

Markets will now closely watch:

• July CPI data (due August 13)
• FOMC statements and speeches
• Global macro trends and trade developments

If inflation continues to ease, the Fed may have room to lower interest rates to support slowing investment and labor markets.

📢 Final Thoughts

The flat PPI and cooling core inflation signal relief for businesses facing high input costs. While goods prices remain volatile, the overall trend points to moderating inflation, offering some hope for both manufacturers and consumers.

💬 What are your thoughts on wholesale inflation trends? Are you seeing cost relief in your business? Share in the comments!

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