Jordan Producer Price Index YoY: December 2025 Release and Macro Implications
The latest data from the Sigmanomics database reveals Jordan’s Producer Price Index (PPI) declined by 0.87% year-over-year (YoY) in December 2025. This marks a significant moderation from November’s steep 1.80% drop and beats market expectations of a 0.40% decline. This report analyzes the PPI trend within Jordan’s broader economic context, comparing recent readings with historical data, and assesses the implications for monetary policy, fiscal stance, external risks, and financial markets.
Table of Contents
Jordan’s PPI YoY reading of -0.87% in December 2025 signals a continued deflationary trend in producer prices, albeit less severe than the prior month’s -1.80%. Over the past 12 months, the PPI has averaged a -0.80% decline, reflecting persistent downward pressure on input costs. This trend is notable given Jordan’s ongoing economic challenges, including subdued domestic demand and external shocks.
Drivers this month
- Energy prices stabilized after months of volatility, reducing downward pressure on producer costs.
- Manufacturing sectors saw modest cost increases, partially offsetting declines in agriculture and mining.
- Supply chain improvements helped ease input cost deflation compared to November.
Policy pulse
The PPI remains below zero, signaling weak inflationary pressures at the producer level. This supports the Central Bank of Jordan’s cautious stance on monetary tightening, as inflation remains subdued relative to the 3% target. The moderation from November’s sharp decline may reduce urgency for further rate cuts but keeps accommodative policy justified.
Market lens
Immediate reaction: The Jordanian dinar (JOD) strengthened slightly against the USD, reflecting relief at the less severe PPI drop. Local bond yields edged down 5 basis points, while equity markets showed mild gains in industrial sectors.
The PPI’s trajectory must be viewed alongside core macroeconomic indicators. Jordan’s GDP growth forecast for 2025 remains modest at 2.10%, constrained by regional geopolitical tensions and slow private sector investment. Inflation, measured by the Consumer Price Index (CPI), is running near 1.50%, well below the central bank’s target range.
Monetary Policy & Financial Conditions
The Central Bank of Jordan has maintained its benchmark interest rate at 4.25% since mid-2025, balancing subdued inflation with the need to support growth. Financial conditions remain accommodative, with stable credit growth and moderate liquidity in the banking system. The PPI’s decline supports the current stance, reducing inflationary risks.
Fiscal Policy & Government Budget
Jordan’s fiscal deficit narrowed to 3.80% of GDP in Q3 2025, aided by improved tax collection and restrained public spending. However, rising global energy prices and subsidy costs pose risks to fiscal consolidation. The PPI’s downward trend may ease input cost pressures on government procurement, marginally improving budgetary outlooks.
Sectoral breakdowns show that energy prices, which had driven much of the prior declines, stabilized in December. Manufacturing input costs rose 0.20% YoY, while agriculture and mining continued to see modest deflation near -1.10%. Supply chain normalization and easing commodity prices contributed to this mixed picture.
This chart highlights a trend toward moderation in producer price deflation. The reversal from November’s steep drop signals easing cost pressures, which could translate into more stable consumer prices ahead. The PPI’s trajectory will be critical for monetary policy calibration in early 2026.
Market lens
Immediate reaction: The JOD/USD exchange rate appreciated 0.15% within the first hour of the release, reflecting market relief. The 2-year government bond yield declined 4 basis points, while the Amman Stock Exchange’s industrial index rose 0.30%, signaling improved investor sentiment.
Looking ahead, the PPI’s path will be shaped by several factors. Energy price volatility remains a key risk, as Jordan imports most of its fuel. Geopolitical tensions in the Middle East could disrupt supply chains, pushing costs higher. Conversely, continued fiscal discipline and monetary accommodation may support gradual economic recovery and price stability.
Bullish scenario (30% probability)
- Global energy prices decline, easing input costs further.
- Regional stability improves, boosting trade and investment.
- PPI turns positive by mid-2026, signaling inflation normalization.
Base scenario (50% probability)
- Energy prices remain stable, with moderate fluctuations.
- Geopolitical risks persist but do not escalate significantly.
- PPI hovers near zero, maintaining subdued inflation pressures.
Bearish scenario (20% probability)
- Energy price spikes due to supply disruptions.
- Geopolitical tensions escalate, impacting trade routes.
- PPI declines further, risking deflationary spiral and policy tightening.
Jordan’s December 2025 PPI YoY reading of -0.87% signals a tentative stabilization in producer prices after a sharp November decline. While deflationary pressures persist, the moderation suggests easing input cost volatility. Policymakers should monitor energy markets and geopolitical developments closely, as these remain key drivers of inflation dynamics. Financial markets have responded positively, reflecting cautious optimism about Jordan’s inflation outlook and economic resilience.
Continued fiscal prudence and accommodative monetary policy will be essential to support growth and price stability. The PPI’s evolution will remain a critical barometer for Jordan’s macroeconomic health in 2026.
Key Markets Likely to React to Producer Price Index YoY
The PPI is a leading indicator for sectors sensitive to input costs and inflation expectations. Markets such as the Jordanian dinar (JOD/USD), local government bonds, and industrial equities typically respond to PPI shifts. Additionally, global energy-linked assets and regional currency pairs may track PPI movements due to Jordan’s import dependence.
- JODUSD – Directly reflects currency strength influenced by inflation and trade balance.
- AMX – Amman Stock Exchange index sensitive to industrial sector cost changes.
- USDILS – Regional currency pair affected by Middle East geopolitical risks impacting Jordan.
- BTCUSD – Crypto asset often viewed as inflation hedge, reacting to macro price trends.
- ENP – Energy sector stock correlated with global fuel price shifts impacting Jordan’s PPI.
Insight: PPI vs. JODUSD Exchange Rate Since 2020
Since 2020, the Jordanian dinar’s exchange rate against the USD has shown moderate sensitivity to PPI fluctuations. Periods of rising PPI often coincide with JOD depreciation due to inflationary pressures, while PPI declines correlate with currency stabilization or appreciation. This relationship underscores the PPI’s role as a forward-looking inflation gauge influencing monetary policy and FX markets.
FAQs
- What is the significance of Jordan’s Producer Price Index YoY?
- The PPI YoY measures changes in prices received by producers, indicating inflation trends and cost pressures in the economy.
- How does the PPI affect Jordan’s monetary policy?
- Persistent PPI declines suggest weak inflation, supporting accommodative monetary policy, while rising PPI may prompt tightening.
- What external factors influence Jordan’s PPI?
- Energy prices, regional geopolitical risks, and global supply chain dynamics are key external drivers of Jordan’s PPI.
Key takeaway: Jordan’s PPI YoY decline moderated in December 2025, signaling easing deflationary pressures but underscoring the need for vigilant policy amid external uncertainties.
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 YoY of -0.87% compares favorably to November’s -1.80% and the 12-month average of -0.80%. This marks a clear reversal from the sharp deflationary spike last month, indicating some stabilization in producer prices.
Historically, the PPI has fluctuated between mild deflation and near-zero growth over the past year, with May 2025’s -0.38% and September’s -0.88% readings framing the recent volatility. The current print suggests a partial rebound in producer costs, especially in manufacturing and energy sectors.