U.S. PPI Drops 0.3% in June, Easing Rate-Hike Fears and Lifting Stock Futures
U.S. wholesale inflation cooled more than expected in June, reinforcing signs that price pressures are easing and prompting markets to scale back expectations for another Federal Reserve rate increase.
The Producer Price Index (PPI) fell 0.3% from May, the steepest monthly decline since April 2025, the U.S. Bureau of Labor Statistics reported. Economists had forecast no change. On a year-over-year basis, producer prices were up 5.5%, slowing from 6% in May.
The pullback was driven largely by cheaper energy. Prices for final-demand goods dropped 1.4%, the biggest decline since July 2022, led by a 12% fall in gasoline. Overall energy prices slid 6.4%, while food prices decreased 0.6%. Services prices rose 0.2%, indicating underlying inflation pressures remain.
Core PPI, which excludes food and energy, increased 0.2% for the month and 4.7% from a year earlier. The government also revised May's PPI gain down to 0.6%.
Following the release, prediction-market odds of a July rate hike fell to about 4%, based on a chart circulated by The Kobeissi Letter. That figure reflects traders' positioning, not an official Fed projection. Reuters noted the data point to easing price pressures, even as inflation remains above the Fed's target.
U.S. stock futures advanced after the report. Nasdaq 100 futures rose roughly 0.6% to 0.7%, while S&P 500 futures gained about 0.2%. Dow Jones Industrial Average futures were flat to up around 0.2%, according to Barron's. Early gains were led by technology shares as softer inflation reduced concerns the Fed may need to lift borrowing costs again.
Futures also drew support from strong corporate earnings and strength in semiconductor names. Still, the move was measured, with investors weighing a broader set of drivers beyond a single inflation print, including earnings, interest-rate expectations, oil prices and geopolitical developments. Higher oil prices could also erode some of June's improvement in producer inflation in coming months.
