July PPI Flat, Further Reducing Fed Hike Expectations

Wholesale price data released August 13, 2026, showed the producer price index flat month-over-month after a revised 0.1% June decline, missing the 0.2% consensus and underscoring cooling pipeline pressures.

Core PPI, stripping food and energy, advanced just 0.2% compared to the anticipated 0.3%, extending the string of soft readings that followed the prior day’s CPI report.

This outcome lowered the probability of a Federal Reserve rate hike in September to around 31-35% from 40% the previous session according to futures pricing.

The benign print supported a rally in equities, pushing the S&P 500 to fresh intraday highs while the 10-year Treasury yield fell toward 4.64%. The dollar index slipped modestly as markets digested the cumulative evidence of contained inflation.

Economists highlighted that the data reduces urgency for immediate tightening but leaves room for action if subsequent reports show reacceleration, especially with inflation still well above target.

Market participants are now focused on the interplay between cooling goods prices and potential services stickiness.

Rate-sensitive assets including growth equities and longer-duration bonds reacted favorably, while commodity-linked sectors saw pressure from lower oil prices amid the broader risk-on tone.

Traders should watch the next round of inflation prints, labor market indicators, and Fed commentary closely ahead of the September FOMC to gauge whether the central bank maintains its data-dependent stance or signals a firmer path.

The PPI outcome adds to the narrative that recent energy volatility has not yet translated into broad-based price pressures, potentially delaying any policy response.