The Producer Price Index (PPI) for final demand decreased by 0.1% in August 2025 on a seasonally adjusted basis, marking an unexpected decline after a 0.7% rise in July (revised from an initial 0.2% increase). This followed a 0.1% gain in June. Over the 12 months ending in August, the final demand PPI rose 2.6% year-over-year, down from a revised 3.1% in July and below the expected 3.3%. The monthly drop was primarily driven by a 0.2% decline in final demand services prices, offset slightly by a 0.1% increase in final demand goods.
Core PPI Measures:
The core PPI (final demand less foods, energy, and trade services) increased 0.3% monthly, the fourth straight gain, with a 12-month advance of 2.8%—the highest since March 2025's 3.5% and below the anticipated 3.5%.
Sector Breakdowns:
Final Demand Services: Fell 0.2%, led by a 1.7% drop in trade services margins (e.g., machinery and vehicle wholesaling down 3.9%). Gains included portfolio management (+2.0%), truck transportation of freight, and apparel wholesaling.
Final Demand Goods: Rose 0.1%, boosted by tobacco products (+2.3%), beef and veal, processed poultry, and electric power. This was tempered by a 0.4% energy decline, including utility natural gas (-1.8%).
Intermediate Demand: Processed goods prices rose 0.4% (e.g., aluminum mill shapes +5.5%), unprocessed goods fell 1.1% (e.g., crude petroleum -2.8%), and services increased 0.3%.
Production Stages (12-Month Changes): Stage 4 intermediate demand +3.1%, Stage 3 +2.5%, Stage 1 +1.8%, Stage 2 +0.6%.
Notable Trends and Revisions:
The report signals cooling wholesale inflation, potentially supporting Federal Reserve rate cut expectations amid softer-than-expected data.
Revisions for April–July data were incorporated based on late reports and respondent corrections, with July's monthly gain now at +0.7% (up from +0.2%).
The next PPI release, for September 2025 data, is scheduled for October 16, 2025, at 8:30 a.m. ET.
The next PPI release, for September 2025 data, is scheduled for October 16, 2025, at 8:30 a.m. ET.