⬤ December's inflation data caught markets off guard as Core Producer Price Index numbers came in hotter than anticipated. The year-over-year reading hit 3.3%, crushing the 2.9% consensus and marking a notable acceleration from November's 3.1%. Released January 30, 2026 by the Bureau of Labor Statistics, the figures show producers are facing stiffer pricing pressures for goods and services outside food and energy.
⬤ Core PPI tracks what producers charge for their output and serves as an early warning system for broader inflation trends. December's jump continues the rebound from 2023's lows when the index bottomed near 2%. The chart data reveals a steady climb through 2024 and into 2025, with the latest print pushing inflation solidly back above 3%—a level that raises concerns about sticky inflation.
⬤ The bigger-than-expected reading highlights how production costs remain stubbornly high across manufacturing and services. That 3.3% annual increase means businesses are still dealing with elevated input and operating expenses. Since producer prices often flow through to consumer prices down the line, this strengthening PPI suggests inflation might not cool as quickly as markets hoped.
⬤ For traders, this matters because producer inflation shapes policy expectations and currency moves. The acceleration throws a wrench into the disinflation story and could shift rate cut bets. With the Fed still focused on bringing inflation under control, hotter PPI data keeps pressure on policymakers and adds uncertainty to the dollar's direction as markets recalibrate their inflation and rate outlooks.
