U.S. June PPI Flat Indicates Muted Tariff Inflation Impact

The U.S. Producer Price Index (PPI) for June remained flat month-over-month, rising 2.3% year-over-year, which was below Wall Street expectations and points to a softer inflation environment. Core PPI, excluding food, energy, and trade services, also showed no monthly change but increased 2.5% annually, reflecting mixed signals about inflation pressures. While prices for final demand goods rose slightly, gains were offset by a drop in services prices, and the impact of tariffs on inflation appears mild, contradicting fears of a large inflation surge from trade tensions. These inflation dynamics have led to uncertainty in financial markets regarding the Federal Reserve's next moves, with investors split on the likelihood of a rate cut in the near term, although a rate hold is widely expected at the upcoming July meeting. President Trump reiterated calls for lowering interest rates to support businesses and households amid these economic conditions. Market reactions to the PPI data were muted, with some optimism for corporate earnings but cautious sentiment overall as traders assess uneven price pressures and tariff-related inflation effects.