August PPI and CPI Releases: What to Expect Thursday and Friday

The August Producer Price Index (PPI) is released tomorrow and could give us a preview of what to expect Friday when the August Consumer Price Index (CPI) is released. We say “could” because the prices producers pay to bring a good to market don’t always get passed on to the end consumer. Energy costs are a major factor in producer costs, and producers have to weigh whether to raise prices when higher energy costs may only be temporary.

PPI: A Tougher Read This Month

July PPI came in low month over month, actually negative, at -0.1% from June but up 4.7% from July 2025. The year-over-year increase wasn’t a surprise, since higher oil prices through the spring worked their way through the data. The negative month-over-month number was a direct result of oil prices falling in June to their lowest levels since the start of the year.

August is harder to call. Oil traded in the low $80s per barrel for most of the month, with a brief dip into the upper $70s. Our expectation is numbers similar to last month: a slight 0.1% increase month over month, with a mid-4% year-over-year number, since last year’s increases are now baked into the annual comparison.

CPI: The Bigger Question

July headline CPI (all items) came in at a 0.1% increase month over month and 3.4% year over year numbers that track closely with the swings in oil markets: a large increase in the spring, a correction in June as oil prices dropped, then a leveling off in July.

We expect August to stay fairly level, since prices largely adjusted in the spring when oil peaked above $100 per barrel. Any increases now are likely coming from the holdouts who didn’t raise prices back then and are adjusting to oil trading higher than it started the year, though still well below the spring peak. Our estimate: 0.2% month over month for both headline and core (excluding energy), with year-over-year numbers around 2.4% core and 3.4% headline.

What This Means for the Fed

The Federal Reserve releases its interest rate decision Wednesday afternoon, with Chairman Warsh speaking immediately after. We’re predicting a hold, as we believe the Fed wants to wait a little longer before moving. Last week’s jobs report likely gave them some encouragement, so a cut doesn’t appear to be on the horizon. And with inflation still running higher than they’d like, but so much of it tied to energy prices outside their control, a hold until the next Fed meeting in October is the most likely scenario.

The key for us will be the tone of the press conference and what’s actually said. The Fed’s direction and goals matter more than the funds rate itself.