The Producer Price Index for final demand was unchanged in June, seasonally adjusted, the Bureau of Labor Statistics reported, following a 0.3% increase in May and a 0.3% decline in April. On an unadjusted basis, the PPI rose 2.3% for the 12 months ended in June. Within the headline figure, a 0.3% rise in prices for final demand goods was offset by a 0.1% decline in final demand services. 

Core PPI, which strips out food, energy, and trade services, was also flat in June after a modest 0.1% uptick in May. Year-over-year, the core measure increased 2.5%. 

The mixed inflation signals are keeping markets on edge as they gauge the Federal Reserve’s next move. June’s steady PPI, coupled with signs that tariff-induced inflation is emerging in durable and nondurable goods, has added to the debate over whether the Fed will act this fall. 

“Inflation has started a slow climb as signs of tariff-induced inflation are now evident within durable and nondurable imports,” said Joe Brusuelas, chief economist at RSM U.S. “That prompts an important question: Will service and housing inflation, which is easing but still elevated, cool further to offset what will be a more pronounced increase in durable and nondurable goods?” 

“Our sense is that the Federal Reserve will continue to display patience as the direction of inflation evolves,” he added. 

Traders are now split on whether the Fed will lower its benchmark rate at its September meeting. Markets currently see a 50.5% chance of a quarter-point cut—down from 54.5% earlier this week—and a 48.2% probability that rates stay unchanged, according to the CME FedWatch tool. Just 1.3% of market bets are on a more aggressive half-point cut. 

For the upcoming July FOMC meeting, however, markets remain nearly certain the Fed will hold rates steady, with a 97% chance priced in as policymakers weigh sticky core inflation, tariff impacts, and signs of uneven price pressures across the economy.