US Producer Price Index MoM for December 2025: A Moderated Rise Signals Cooling Inflationary Pressures
Key Takeaways: The US Producer Price Index (PPI) for December 2025 rose by 0.10% MoM, below the 0.30% estimate and the prior month’s 0.30%. This marks a notable slowdown in wholesale inflation, reflecting easing input cost pressures amid tighter monetary policy and subdued demand. The 12-month average PPI growth now stands near 0.20%, indicating a gradual deceleration from mid-2025 highs. Market reactions were muted, with short-term yields and the USD showing limited volatility. The data suggests a cautious but positive outlook for inflation dynamics heading into 2026, though external risks and fiscal uncertainties remain key watchpoints.
Table of Contents
The US Producer Price Index (PPI) for December 2025, released on January 14, 2026, recorded a 0.10% month-over-month increase. This figure fell short of the consensus estimate of 0.30% and was down from November’s 0.30% rise, according to the Sigmanomics database. The PPI measures the average change over time in the selling prices received by domestic producers for their output, serving as a critical early indicator of inflationary trends in the economy.
Drivers this month
- Energy prices contributed less to wholesale inflation, reflecting softer global commodity costs.
- Core goods prices showed modest gains, with manufacturing sectors experiencing subdued demand.
- Services PPI remained stable, indicating steady but restrained pricing power.
Policy pulse
The December PPI reading aligns with Federal Reserve efforts to temper inflation through restrictive monetary policy. The slowdown in producer price growth supports the view that supply-side pressures are easing, potentially allowing the Fed to maintain a cautious stance on further rate hikes.
Market lens
Immediate reaction: US Treasury yields on the 2-year note edged down 3 basis points, while the USD index slipped 0.10% in the hour following the release. Equity markets showed mild gains, reflecting relief over easing inflation pressures.
Examining the PPI within the broader macroeconomic context reveals important linkages. The 0.10% MoM increase in December 2025 compares with a 0.30% rise in November and a -0.10% dip in September, illustrating a volatile but generally decelerating trend over the past quarter. The 12-month average PPI growth rate now hovers around 0.20%, down from peaks near 0.90% recorded in August 2025.
Monetary Policy & Financial Conditions
The Federal Reserve’s ongoing tightening cycle, with benchmark rates elevated near 5.25%, has dampened demand-side inflation pressures. Financial conditions have tightened, as evidenced by higher borrowing costs and a stronger USD through late 2025. The PPI’s moderation supports expectations that inflation is responding to these measures.
Fiscal Policy & Government Budget
Fiscal policy remains moderately expansionary, with government spending elevated but offset by revenue gains from recent tax adjustments. The budget deficit has narrowed slightly, reducing inflationary fiscal impulses. However, ongoing debates over infrastructure and social spending could influence future inflation trajectories.
External Shocks & Geopolitical Risks
Global commodity markets have stabilized after mid-2025 volatility, easing cost pressures on US producers. Geopolitical tensions, particularly in energy-exporting regions, remain a latent risk but have not materially impacted prices this month.
Drivers this month
- Energy PPI growth slowed to 0.05% from 0.40% in November.
- Core goods PPI rose 0.12%, down from 0.25% in the prior month.
- Services PPI remained flat at 0.00%, indicating stable input costs.
This chart highlights a clear deceleration in wholesale inflation, reversing the two-month acceleration seen in October and November. The trend suggests that producer-level price pressures are aligning with broader consumer inflation easing, supporting a more benign inflation outlook for early 2026.
Policy pulse
The data reinforces the Federal Reserve’s narrative that restrictive monetary policy is effective. The PPI’s moderation reduces the risk of second-round inflation effects, potentially allowing the Fed to pause or slow rate hikes in upcoming meetings.
Market lens
Immediate reaction: The 2-year Treasury yield declined modestly, reflecting reduced inflation risk premiums. The USD weakened slightly, while equity indices gained on hopes of a less aggressive Fed stance.
Looking ahead, the PPI’s subdued rise in December 2025 sets the stage for several scenarios:
Bullish Scenario (30% probability)
Inflation continues to ease as supply chains normalize and demand softens. The Fed pauses rate hikes, supporting growth and equity markets. Producer prices stabilize near zero growth, reducing cost-push inflation risks.
Base Scenario (50% probability)
PPI growth remains modestly positive around 0.10-0.15% MoM, reflecting balanced supply-demand conditions. The Fed maintains a cautious approach, with gradual rate adjustments. Inflation expectations stay anchored.
Bearish Scenario (20% probability)
External shocks or fiscal expansion reignite inflation pressures, pushing PPI above 0.30% MoM. The Fed resumes aggressive tightening, risking slower growth and market volatility.
Structural & Long-Run Trends
Longer-term, the PPI’s trajectory reflects structural shifts such as automation, reshoring of manufacturing, and evolving energy markets. These factors may dampen inflation volatility but introduce new dynamics in cost structures.
The December 2025 US Producer Price Index MoM reading of 0.10% signals a meaningful slowdown in wholesale inflation. This moderation aligns with tighter monetary policy and stable fiscal conditions, suggesting inflation pressures are easing at the producer level. While risks from geopolitical events and fiscal policy remain, the data supports a cautiously optimistic outlook for inflation and economic growth in early 2026.
Key Markets Likely to React to Producer Price Index MoM
The US Producer Price Index is a leading indicator for inflation trends, influencing multiple asset classes. Markets sensitive to inflation and interest rate expectations typically react to PPI releases. Below are key tradable symbols with historical correlations to PPI movements:
- SPX – The S&P 500 index often reacts to inflation data through shifts in equity valuations and sector rotations.
- USDEUR – The USD/EUR currency pair reflects shifts in US inflation and monetary policy relative to Europe.
- USDJPY – Sensitive to US interest rate expectations driven by inflation data.
- BTCUSD – Bitcoin often reacts to inflation fears and monetary policy shifts as an alternative asset.
- TLT – The long-term Treasury ETF moves inversely with inflation expectations and yields.
Insight: PPI vs. SPX Since 2020
Since 2020, spikes in the US Producer Price Index have often preceded volatility in the S&P 500 (SPX). Periods of rising PPI correlate with increased market uncertainty and sector rotation away from growth stocks. Conversely, PPI moderation tends to support equity rallies, as seen in late 2025. This relationship underscores the importance of PPI as a barometer for inflation-driven market sentiment.
Frequently Asked Questions
- What does the US Producer Price Index MoM indicate?
- The PPI MoM measures the monthly change in prices received by producers, signaling inflation trends at the wholesale level.
- How does the December 2025 PPI reading affect inflation expectations?
- The 0.10% rise suggests easing inflation pressures, supporting expectations of a slower pace of price increases in the near term.
- Why is the PPI important for monetary policy?
- The Federal Reserve monitors PPI as an early indicator of inflation, influencing decisions on interest rates and financial conditions.
Takeaway: December’s modest 0.10% PPI increase confirms a cooling inflation environment, bolstering hopes for a stable monetary policy path in 2026.
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
The December 2025 PPI increase of 0.10% MoM contrasts with November’s 0.30% rise and the 12-month average of approximately 0.20%. This slowdown is evident across key sectors, with energy and core goods prices leading the moderation.
Historical data from the Sigmanomics database shows a peak of 0.90% in August 2025, followed by a sharp deceleration through autumn. The recent print confirms this trend, suggesting that inflationary pressures at the producer level are easing.