The June PPI final demand release lands at 8:30 ET Thursday July 16 from the US Bureau of Labor Statistics, a day after headline CPI fell 0.4 percent and core printed flat. Consensus sits at 0.10 percent month-over-month on headline PPI and 0.20 percent on core (final demand less foods, energy, and trade services), with headline year-over-year at 2.4 percent and core at 2.7 percent. This is the confirm print on Wednesday’s clear. Fed-funds futures closed Wednesday with the September 17 cut probability at 98 percent (up from 97) and the December 10 second cut probability at 62 percent (up from 55), both marked from Tuesday’s close.
PPI healthcare services against CPI medical services
The single line that most tightly cross-checks Wednesday’s core-flat CPI print is PPI final demand services for healthcare, released inside the Thursday PPI detail tables. CPI medical services printed plus 0.11 percent in June, one basis point softer than May’s plus 0.14 percent, and was one of the two lines that carried core to flat. A PPI healthcare services print at 0.15 percent or below confirms the CPI read and tightens the desk’s conviction on the flat core through year-end. A PPI healthcare services print at 0.30 percent or above is the small-print risk that dinged Wednesday’s clear and reads as a signal that the annual health insurance rebase due in October is coming in hot. Base rate on the confirm case: 68 percent on the June setup, given the CMS provider survey inputs and the two-month PPI healthcare drift.
PPI final demand goods against CPI core goods ex used vehicles
The tariff pass-through line runs from PPI final demand goods (excluding foods and energy) into the CPI core goods ex used vehicles print two to four weeks later, so Thursday’s June PPI reads directly against the June CPI core goods line. CPI core goods ex used vehicles printed 0.22 percent in June, at the low end of the 0.20 to 0.30 percent band the desk holds as the tariff pass-through range, and inside the 0.26 percent May print. A June PPI core goods print at 0.30 percent or above is the acceleration case that argues the pass-through has more to run into the second half. A print at 0.15 or below confirms the CPI reading and reads as the first sign the wave is cresting. The NFIB comp-plans at 17 and ISM Manufacturing prices-paid at 63.1 argue for the middle of the band, not the acceleration case.
PPI final demand services ex trade and transportation against supercore
The CPI supercore print, services ex shelter and ex energy services, ran 0.21 percent in June, the fourth consecutive month inside the 0.20 to 0.25 band. The PPI cross-check is final demand services ex trade, transportation, and warehousing, the residual that maps closest to the services-inflation basket the FOMC watches. May PPI final demand services ex trade and transportation printed 0.18 percent. A June print inside 0.15 to 0.20 confirms the supercore read and holds the December second cut at 62 percent. A print at 0.28 or above is the modal risk case and pulls December back into the 55 to 58 range, though holds September at 98 percent.
What Thursday does to the FOMC July 30 setup
Clean confirm across all three lines at consensus or better moves the December second cut probability from 62 percent into the 68 to 72 range and puts the third cut (currently priced into the March 2027 window) into play for January on a small share of the curve. Two of three confirm, one line hot, on either healthcare services or core goods, holds September at 98 and leaves December in the 58 to 62 range. This is the modal read: the desk assigns roughly 48 percent probability. Two-line miss, meaning healthcare services above 0.30 and core goods above 0.30 together, is the tail case that pulls the September cut back into the 92 to 94 range and collapses December toward 45 to 50 percent. Base rate on the tail: 10 to 14 percent.
The remaining pre-FOMC data set includes June retail sales on Thursday July 17 at 8:30 ET, June housing starts on Friday July 18 at 8:30 ET, the July Empire and Philly Fed surveys next week, and the Q2 GDP advance estimate on Wednesday July 30 at 8:30 ET, ninety minutes before the FOMC statement release. Thursday’s PPI is the last inflation input into the decision. Everything after it reads against employment, activity, and the pass-through.