Thursday's producer price report tests whether June's energy relief was a one-off

by Tomas Ferreira · August 12, 2026

Markets Reporter, US Market Current

The July producer price index arrives Thursday at 8:30 a.m. ET, and it asks a narrower question than Wednesday's consumer report. July CPI told markets inflation is not accelerating. PPI will tell them whether the relief in the wholesale pipeline in June was structural or a one-month gift from cheap fuel.

June set a low bar. The Bureau of Labor Statistics reported that final demand prices fell 0.3% on the month while still running 5.5% above a year earlier. The drop was concentrated almost entirely in goods, which fell 1.4% — the largest monthly decline since July 2022's 1.9% fall. Energy prices at the producer level dropped 6.4% and foods fell 0.6%. BLS attributed nearly two-thirds of the goods decline to gasoline alone, which fell 12.0%.

Strip out fuel and the picture was far less benign. Goods excluding food and energy rose 0.2% in June. Services rose 0.2%, with more than 60% of that advance coming from margins for final demand trade services, up 0.4%. Transportation and warehousing services edged down 0.1%. The core measure BLS publishes — final demand less foods, energy and trade services — rose just 0.1% on the month but was still 5.1% higher than a year earlier.

Forecasters expect the fuel discount to disappear. Investing.com's consensus has headline PPI rising 0.2% in July against June's 0.3% decline, with core PPI up 0.3% after a 0.2% gain. On an annual basis the same survey looks for headline PPI at 4.9%, down from 5.5%, and core at 4.2%, down from 4.7%. RBC Economics is slightly softer on the headline, penciling in a 0.1% monthly rise with core at 0.3%.

The gap between wholesale and consumer inflation is the part worth watching. Even if Thursday matches the 4.9% consensus, producer prices would still be running well above the 3.4% annual consumer rate BLS reported Wednesday. That wedge resolves one of two ways over time. Firms absorb it and margins compress, or they pass it downstream and consumer inflation stops cooling. June's data showed the second mechanism starting to work, with trade services margins — the markup captured by wholesalers and retailers — doing most of the lifting on the services side.

Energy has already turned. Trading Economics data on Wednesday put Brent at $88.63 a barrel, up 6.40% over the past month and 35.05% over the past year, with WTI at $83.12, up 6.37% on the month and 32.67% on the year. Al Jazeera reported Brent's October contract at $89.53 at 08:00 GMT Wednesday after a gain of more than 2% overnight, leaving the benchmark roughly 24% higher than in late February.

The bid comes from the Strait of Hormuz, which remains largely shut after the US-Israel war on Iran. Al Jazeera reported that about 10 vessels crossed on Monday against roughly 130 daily transits before the conflict, with oil flows running at 7 million to 9 million barrels a day versus about 20 million historically. June Goh of Sparta Commodities told the outlet that prices look supported in the $85 to $90 range absent fresh optimism on a deal, while Tim Waterer of KCM Trade said markets have not fully given up on an agreement but confidence is eroding.

Timing cuts against a clean read on Thursday. The crude rally firmed late in July and into August, which means August's report will capture more of it than July's. Refined products are further along: Trading Economics shows gasoline futures up 50.53% and heating oil up 91.85% over the past year. Those costs sit directly inside the PPI goods basket and inside the freight and utility lines that feed services.

The Fed has a specific reason to care. Several PPI components feed the personal consumption expenditures deflator, the gauge the central bank actually targets, as Kraken's economic brief noted in previewing the release. With one more inflation print due before the September meeting, Thursday's detail matters more than the headline. Weekly jobless claims land the same morning, with Investing.com's consensus at 202,000 initial claims against 199,000 previously and continuing claims at 1.80 million, and July retail sales follow Friday at 8:30 a.m. ET.

Two outcomes would change the conversation. If core PPI prints at or above 0.3% while goods rebound alongside energy, the case that disinflation is broadening gets thinner and rests mainly on year-ago comparisons. If trade services margins give back June's gain instead, that is evidence firms are eating the tariff and energy costs rather than moving them along — better for consumer inflation in the near term, worse for corporate earnings later in the year.