July's producer price data just dropped the pieces that matter most for the Fed's inflation picture.
Goods prices fell 0.2% month-over-month. Services ticked up 0.6%. The blend? A modest 0.2% gain overall.
This is the raw material the Fed watches when they talk about their "preferred measure." Not the headline number everyone panics over. The components that actually flow through to what consumers pay.
What's interesting: services inflation remains sticky while goods deflation continues. That's the pattern we've seen for months now. The economy is splitting in two.
The Fed won't pivot on one month. But this keeps the door open for them to pause the tightening cycle without looking foolish. Markets will read into it what they want to read into it.
Meanwhile, most people still don't understand the difference between PPI and CPI, let alone why the Fed cares more about PCE. The gap between what moves markets and what people actually experience keeps widening.
Goods prices fell 0.2% month-over-month. Services ticked up 0.6%. The blend? A modest 0.2% gain overall.
This is the raw material the Fed watches when they talk about their "preferred measure." Not the headline number everyone panics over. The components that actually flow through to what consumers pay.
What's interesting: services inflation remains sticky while goods deflation continues. That's the pattern we've seen for months now. The economy is splitting in two.
The Fed won't pivot on one month. But this keeps the door open for them to pause the tightening cycle without looking foolish. Markets will read into it what they want to read into it.
Meanwhile, most people still don't understand the difference between PPI and CPI, let alone why the Fed cares more about PCE. The gap between what moves markets and what people actually experience keeps widening.