US PPI Expectations Preview – 10/9/2025
US PPI Expectations Preview: Producer Price Index (Aug) — Brief Preview
The August PPI (Wed 10 Sep, 13:30 UK / 08:30 ET) is a key pipeline read into core PCE via core‐goods and business services costs. After July’s outsized +0.9% jump, driven largely by services margins – consensus looks for cooler prints (headline +0.3% m/m, core +0.3% to 0.4%, core y/y 3.5 to3.6%).
The market will focus on three things: (1) whether trade services and fee categories mean-revert, (2) the core-core gauge (ex food, energy, and trade) as the cleanest signal for policy, and (3) any revisions to July’s spike. A benign outcome should keep front-end yields contained and the USD slightly softer, while a renewed core surprise (≥0.5% m/m) would re-ignite concern about sticky services inflation and support the dollar.
Street Expectations
- Headline PPI MoM: Prev 0.9%, Cons 0.3%, Forecast 0.4%
- Core PPI MoM (ex-food & energy): Prev 0.9%, Cons 0.3%, Forecast 0.4%
- Core PPI YoY (ex-food & energy): Prev 3.7%, Cons 3.5%, Forecast 3.6%
Our calls (and why)
- Headline PPI MoM: 0.3% (range 0.2–0.4), in line/slightly softer than the streets forecast of 0.4.
- July’s +0.9% jump was dominated by services/retail margins (+2.0% trade services) and a broad +1.1% services surge—both volatile and prone to partial payback.
- Energy: August retail gasoline edged higher into month-end while diesel eased—a small net tailwind to headline, but not a repeat of July’s outsized services shock.
- PMIs/prices: ISM Manufacturing Prices eased to 63.7 and Services Prices to 69.2 (still hot but a touch cooler) → pressure remains elevated but off July’s boil.
- Core PPI MoM (ex F&E): 0.3–0.4% (base case 0.3%) vs 0.3% consensus.
- July’s +0.9% core pace is unlikely to repeat; PMI commentary and NFIB pricing indicators suggest firms are passing through tariffs selectively, but momentum isn’t accelerating further in August.
- Core PPI YoY (ex F&E): ~3.5–3.6% (base 3.5%), at/just below consensus.
- Even with a firmer monthly print, base effects vs Aug-2024 should nudge YoY down from 3.7%. July’s “core-core” (ex food, energy and trade) was +0.6% MoM / 2.8% YoY—watch that gauge for a cleaner pipeline read to PCE. Bureau of Labor Statistics
What’s driving our view
- July shock = services/margins: BLS flagged trade services and portfolio management fees among big gainers—classic candidates for partial unwind.
- Input costs stayed elevated, but cooled a touch: ISM Services Prices 69.2 (from 69.9) and Mfg Prices 63.7 (from 64.8) → still inflationary, but less intense than July.
- Energy optics: Gasoline up modestly through late-Aug; diesel down; WTI broadly softer vs early summer → small net positive to headline, limited impulse to core.
- Trade/import prices: Import prices rose in July (core +0.3%), consistent with tariff-sensitive goods pressure feeding the pipeline, but not accelerating in August data we have.
What would move markets at 13:30 UK
- Hawkish surprise: ≥0.5% on headline or core, or core-core (ex F,E,trade) ≥0.4% = front-end USTs up, USD firmer; watch USD/JPY topside.
- Benign read: 0.2% headline and core, core-core ≤0.2%, and limited July revisions = USTs bid, USD a bit heavier (weaker).
- Skew to watch in tables: If trade services margins retrace sharply, headline can still print 0.2% even with firm energy.
Receipts / context
- Schedule (Aug PPI on Sep 10, 08:30 ET).
- July PPI details: headline +0.9%, services +1.1%, goods +0.7%; core ex F&E +0.9%; core-core +0.6% MoM, 2.8% YoY.
- ISM prices (Aug): Mfg 63.7; Services 69.2.
- Energy (Aug): retail gasoline up into 8/25–9/1; diesel down for most of Aug.
- Import prices (Jul): headline +0.4%, core +0.3%; tariff-sensitive goods firmer.
Bottom line
We’re looking for mean reversion after July’s spike: headline PPI 0.3%, core 0.3%, and core YoY 3.5%. Risks are two-sided: modest energy tailwind vs a likely partial unwind in trade-services margins. Net-net, the print should validate sticky—yet not re-accelerating—pipeline inflation unless core re-fires at above 0.5%.
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