US Producer Price Index: August Headline Cools, but Core Inflation Still Sticky
August’s PPI numbers are a mixed bag for anyone watching inflation. The headline figure slipped –0.1% month-over-month, a reversal from July’s sharp jump. But dig deeper and core inflation (excluding food, energy, and trade) is still running hot, rising 0.3% for the month and 2.8% year-over-year, marking the fourth straight monthly increase.
What’s driving the split? Processed intermediate goods prices keep climbing, while unprocessed commodity costs are falling. Here’s a quick side-by-side:
| Category | July 2025 (m/m) | Aug 2025 (m/m) | Aug 2025 (y/y) |
| Headline PPI (Final Demand) | +0.5% | –0.1% | +1.7% |
| Core PPI (ex-food, energy, trade) | +0.4% | +0.3% | +2.8% |
| Final Demand Goods | +0.5% | +0.1% | +1.3% |
| Final Demand Services | +0.6% | –0.2% | +1.7% |
| Processed Goods (Intermediate) | +0.4% | +0.4% | +3.0% |
| Unprocessed Goods (Intermediate) | +0.3% | –1.1% | –5.2% |
Here’s the bottom line:
- Headline inflation may be cooling, but sticky core prices and rising processed input costs point to persistent underlying pressure.
- Businesses could see margins squeezed if they can’t pass higher input costs along.
- For the Fed, there’s room to cut rates, but expect a cautious approach, don’t bet on aggressive moves just yet.
What does this mean for you?
- Investors: Relief from the headline dip, but markets may stay choppy as the Fed tiptoes on rate cuts.
- Business leaders: Keep an eye on processed inputs and service costs, this is where inflation’s hiding out.
- Policy watchers: Disinflation isn’t a straight line. Swings in services and trade margins mean the Fed will stay wary.
In short: The fight against inflation isn’t over. The details under the hood matter more than ever.
