10/04/2025—We anticipate that the producer price index (PPI) for final demand increased by 0.2% in August, representing a considerably milder pace compared to the unexpected 0.9% uptick seen in July. This projection for a more restrained monthly advance partly stems from significantly reduced impacts from food and energy relative to the previous month. In particular, we expect PPI energy prices to drop by 0.8%, primarily driven by reductions in various fuels, even though PPI electricity costs probably rose modestly. PPI energy prices had climbed 0.9% monthly in both June and July. We also project PPI food prices to remain unchanged in August, coming after two consecutive months of more substantial increases. Should our estimate prove accurate, year-over-year PPI inflation would moderate slightly to 3.2%, after escalating to 3.3% in July from 2.4% in June.

Excluding food and energy, we forecast a 0.3% advance in core PPI, which would result in a year-over-year inflation rate of 3.5%. This would mark a minor slowdown from July’s 3.7% but remain the highest figure in five months. Building on the ongoing moderate uptick in core goods PPI prices—which may increasingly reflect tariff effects—we expect another 0.4% monthly gain last month. With further tariffs taking effect and companies progressively transferring more of these cost burdens, core goods PPI prices might encounter additional upward momentum.

Core services prices surged markedly in the July data due to a substantial rise in trade services (capturing margins for wholesalers and retailers); this segment is erratic and susceptible to adjustments, so we aren’t predicting a comparable pattern for August. However, there is undoubtedly some possibility of a repeat contribution. We anticipate construction PPI prices to show little variation in August.