US CPI/PPI - 2025-07-14

PPI Update:  Final demand up 0.06% for June and .019% three months at an annual rate. Tariffs are a tax on producers. So why are they not showing up at all in producer prices?

Core beat the consensus, headline was spot-on. We were expecting better. There's really nothing to see here -- CPI is about at target YOY. Core ex-OER is well below target. But goods (tariffed) inflated slightly more in June than services (non-tariffed). Even though the difference between them is rounding error, confirmation bias is so strong that the consensus will continue to conclude that tariffs are inflationary. Or maybe the consensus will go even further, arguing that if services aren't further below goods, then tariffs are proliferating throughout the whole price structure. So much for our speculation that a palace rebellion of Fed officials seeking Powell's job would drive a rate cut at the July FOMC. That seems off the table now.