Investors and Federal Reserve officials are closely monitoring the Producer Price Index (PPI) for January, scheduled for release on Thursday, February 13, 2025, at 8:30 a.m. ET. The PPI measures the average change over time in the selling prices received by domestic producers for their output, serving as a key indicator of inflation at the wholesale level.
- Monthly Change: Economists anticipate a 0.2% increase in the PPI for January, consistent with the 0.2% rise observed in December.
- Annual Change: The year-over-year PPI is projected to decline slightly to 3.2% from December’s 3.3%.
- Excluding Food and Energy: The core PPI, which excludes volatile food and energy prices, is expected to rise by 0.3% in January, reversing the trend of no change observed in December. The annual core PPI is forecasted to decelerate to 3.3%.
The PPI complements the Consumer Price Index (CPI) in assessing inflation trends. While the CPI reflects price changes from the consumer’s perspective, the PPI focuses on the wholesale level. Both indices are closely watched by the Federal Reserve to inform monetary policy decisions.
Recent CPI data for January showed higher-than-expected increases, with the core CPI and headline CPI rising by 0.4% and 0.5%, respectively. This has led to higher bond yields and lower stock prices, impacting the likelihood of interest rate cuts.
Federal Reserve Chair Jerome Powell has emphasized the need to maintain restrictive policies, noting that while progress has been made, inflation control is not yet complete. He highlighted the importance of evaluating longer-term trends over individual data points, awaiting further insights from the PPI.
Investors are keenly observing the PPI release for indications of renewed inflation pressures or signs of further improvement, as these insights will influence expectations regarding the Fed’s future monetary policy actions