Breaking News: US core PPI rises by 3.0% Y/Y in May vs 3.1% expected

• Producer Price Index (PPI) ex. food & energy (Core) (YoY): +3.0% vs +3.1% expected, miss of -0.1%
• Producer Price Index (PPI) ex. food & energy (Core) (MoM): +0.1% vs +0.3% expected, miss of -0.2%
• Producer Price Index (PPI) (YoY): +2.6% vs +2.6% expected, meets consensus
• Producer Price Index (PPI) (MoM): +0.1% vs +0.2% expected, miss of -0.1%

Breaking: US core PPI rises by 3.0% YoY in May, up 0.1% MoM. The report misses expectations, with markets predicting a higher rate of +3.1% YoY, and a monthly gain of +0.3%.

As part of the same release, non-core PPI rose by 2.6% YoY, gaining 0.1% MoM. While the yearly rate met consensus, markets expected a larger monthly gain of +0.2%.

Key takeaway: Core US producer inflation is rising more slowly than expected

In the minutes that followed the release, EUR/USD rose by 0.18%, extending daily gains, while the Dow Jones rose by 0.20%. Gold (XAU/USD) also trades higher, up 0.12%.

When considering both yesterday’s CPI report and strong labour data in recent reports, today’s PPI data adds more pressure to the Fed, which will naturally have a harder time justifying keeping rates unchanged amid easing inflationary pressures.

Read yesterday’s coverage on the Consumer Price Index (CPI) release

As such, we’ve seen some movement in rate cut bets ahead of the FOMC meeting on June 18th, but even still, the Federal Reserve is still overwhelmingly likely to keep rates unchanged, with the first of two rate cuts expected this year predicted to happen in September.

However, it is important to note that inflation remains above the Fed target of 2%, with the potential for tariff-borne inflation still very much a concern.