Unexpected Cooling in U.S. Wholesale Inflation, June 2025
U.S. wholesale inflation experienced an unexpected cooldown in June 2025, providing a degree of relief amidst concerns that President Trump’s tariff policies would escalate prices. The Producer Price Index (PPI) displayed a headline rate of 2.3% year-over-year, a decrease from 2.7% in May, marking the lowest level since September 2024. The core PPI reached 2.6% annually, recording the smallest gain since July 2024.
The recent inflation data comes as markets are keenly observing for indications of how Trump’s trade policies might influence price pressures. While the evidence of tariff impacts on June prices was varied, there were certain signs that the duties are having an effect, with prices of apparel and home furnishings rising, while vehicle prices saw a decline. This report led President Trump to advocate for Federal Reserve interest rate cuts.
Following the inflation report, stock market futures saw an increase and Treasury yields fell, as investors interpreted the data as alleviating pressure on the Federal Reserve to uphold aggressive monetary policy. The market anticipates the Fed to maintain its current stance at its July meeting and potentially reduce rates by a quarter percentage point in September, contingent on economic conditions.