The U.S. Bureau of Labor Statistics (BLS) released the Producer Price Index (PPI) data for April 2025 on May 15, 2025 (Thursday) at 8:30 AM Eastern Time. This report reflects the price situation for April, corresponding to the data from the previous month (March) and the year-on-year changes from April 2024 to April 2025.
Changes in PPI data
Overall PPI: Decreased by 0.5% month-on-month in April 2025 (previous value for March was unchanged at 0.0%), and increased by 2.4% year-on-year.
Core PPI (PPI excluding food and energy): Decreased by 0.4% month-on-month in April, and increased by 3.1% year-on-year. The previous value for March showed a month-on-month increase of approximately 0.2% and a year-on-year increase of 4.0%. This data indicates that overall wholesale price pressures have eased further, especially with a significant decline in core price growth.
Comparison with market expectations
This PPI reading generally fell short of market expectations. According to predictions from Bloomberg and others, the expected month-on-month PPI for April was about +0.2% and year-on-year +2.5%, while the actual data showed a month-on-month change of -0.5% and a year-on-year change of +2.4%. The month-on-month decline was much greater than expected, indicating a significant slowdown in wholesale price growth. Both month-on-month and year-on-year core PPI were also lower than the previous values (core year-on-year fell from 4.0% in March to 3.1%). Overall, the PPI data is weak, with inflation indicators falling short of expectations.
Market immediate reaction
After the data was released, risk assets generally rose, reflecting investors' interpretation of further slowing inflation:
Stock market: On the day the April PPI was released (May 15), major U.S. stock indices rose. The S&P 500 index increased by approximately 0.41%, the Dow Jones Industrial Average rose by about 0.65%, and the Nasdaq 100 index gained about 0.08%.
Dollar Index (DXY): The dollar index weakened slightly, falling by about 0.1%.
Gold prices: Spot gold prices rose by more than 1%, reaching a one-month high at one point, reflecting improved risk appetite and heightened expectations for rate cuts.
U.S. Treasury yields: The bond market strengthened. The 10-year U.S. Treasury yield declined by several basis points after the data was released (at one point falling to around 4.4%). Overall, the decline in yields reflects market optimism about future inflation and an increased expectation of the Federal Reserve shifting towards a more accommodative monetary policy.
Impact on inflation outlook and Federal Reserve expectations
The April PPI data further confirms the trend of slowing inflation. The decline in producer price growth indicates a reduction in upstream cost pressures, which will help curb future consumer inflation in the short term. Market commentary suggests that this significant PPI shortfall creates more room for the Federal Reserve to consider rate cuts. Some analysts pointed out: 'This data creates greater room for the Federal Reserve to cut rates, and market expectations for rate cuts are heating up'; it has also been reported that the market has begun to anticipate that the Federal Reserve might start cutting rates in the second half of this year (around before September).
Considering current inflation indicators such as PPI and CPI, the price increase remains at a moderate level. Federal Reserve officials have recently reiterated their commitment to the 2% inflation target, while persistently low inflation data may prompt a gradual shift in monetary policy from 'holding steady' to 'considering rate cuts.' Therefore, this PPI data helps further alleviate market concerns about rate hikes and raises expectations for rate cuts. Overall, the data suggests that inflationary pressures in the United States remain manageable, and in the short term, the Federal Reserve is more likely to maintain current interest rates and eventually shift towards rate cuts rather than continuing to raise rates.
Reference: U.S. Bureau of Labor Statistics PPI press release; economic media reports.
