by Vincent Muthee
The U.S Bureau of Labor Statistics (BLS) has released fresh inflation data, and the numbers have come in softer than expected. As reported by BLS, the Producer Price Index (PPI) for August climbed just 2.6% year-over-year, below the anticipated 3.3%.
This release has arrived just a day before Consumer Price Index (CPI) data and only a week ahead of the Federal Reserve’s September meeting. Investors have been betting on a rate cut, with this weaker PPI print reinforcing those expectations. Additionally, the figures add another layer of momentum to the argument that inflation pressures are cooling faster than anticipated.
August PPI Shows Producer Inflation is Cooling Down
According to the release by BLS, the headline Producer Price Index fell 0.1% in August from the previous month, contrasting sharply with July PPI rise of 0.7%. On a yearly basis, the 2.6% increase shows that inflation is moderating but remains above the Fed’s 2% target.
JUST IN:
US PPI comes in at 2.6%, lower than the expected 3.3%
Core PPI is 2.8% vs the expected 3.5%
September rate cut inbound. https://t.co/jGFK9rnZQt
— CryptosRus (@CryptosR_Us) September 10, 2025
Core PPI, which strips out food, energy, and trade services, rose 0.3% month-over-month and 2.8% year-over-year. Compared to past data, the recent figures are the highest annual growth since March 2025 indicating price pressures on the underlying level are still holding tight even with the overall slowdown.
The markets had anticipated a 3.3% headline and 3.5% core in PPI, and the lower print was unexpected. As PPI indicates wholesale inflation, it usually gives an indication of the direction consumer inflation would take in the next few months. The soft reading shows that the businesses are already incurring a smaller cost of goods and services. This decreases the threat of high hikes in consumer prices.
Based on this data, the U.S Fed now faces a delicate policy decision. Traders widely expect a 25 basis point (bps) cut next week, but momentum is building around a possible 50bps move. At the moment, data by Polymarket shows odds for a 50bps rate cut in September have soared to 20%.
Implications for Bitcoin and the Crypto Market
The crypto market has been very sensitive to inflation prints and rate expectations. Bitcoin has also traditionally performed well when monetary policy is dovish because the low interest rates boost risk assets. US August PPI figures have added to this narrative with market participants speculating further on a stronger rally should the Fed announce further cuts.
As of this writing, Bitcoin (BTC) is trading at $113,784, an increase of 1.02% on the day according to CoinMarketCap data. This indicates positive momentum for Bitcoin as investors expect a more favorable economic situation, which may serve as an additional boost to digital assets.
However, traders are cautious ahead of the release of the US Consumer Price Index (CPI) on Thursday. A higher-than-projected CPI might cut the edge, whereas cooler figures might accelerate the upside gains in Bitcoin.
For now, crypto markets are locked into macroeconomic cues. With PPI showing cooling producer inflation and the labor market flashing weakness, all eyes turn to the CPI and the Fed’s decision next week. The outcome will set the tone for Bitcoin and broader digital asset performance in the weeks ahead.
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