US producer inflation came in below expectations in July. Although the data eased concerns about further interest rate hikes, Bitcoin failed to stage a strong rally and remained around $63,500 following the release.
According to data released by the US Bureau of Labor Statistics, the Producer Price Index was unchanged on a monthly basis in July. The market had expected producer prices to rise by 0.2%.
Annual PPI inflation declined from 5.5% to 4.7%. Economists had expected the annual rate to come in at 4.9%.
Core PPI declined to 4.2%
Core PPI, which excludes food and energy prices, increased by 0.2% month-over-month in July. The market forecast was 0.3%.
Annual core PPI fell from 4.7% to 4.2%, matching expectations. The figures showed that both headline and core producer inflation slowed compared with June.
A broader measure of underlying inflation, which excludes food, energy and trade services, rose by 0.4% on a monthly basis. The annual increase in this category stood at 4.7%.
Energy prices were the main driver of changes across the PPI components. Prices for final demand goods fell by 0.7%, while energy and food prices declined by 3.1% and 0.9%, respectively. A 5.7% drop in gasoline prices accounted for more than half of the decrease in the goods category.
Bitcoin failed to rally after the PPI data
Despite the weaker-than-expected headline figures, Bitcoin’s price did not post a significant increase. BTC was trading near $63,800 before the release and slipped toward $63,500 afterward.
Bitcoin was down approximately 0.7% on the day as of 3:50 p.m. Türkiye time. Its intraday trading range remained between $63,267 and $64,093.
The initial reaction suggested that investors had largely priced in the softer PPI reading. Consumer inflation data released a day earlier showed an annual rate of 3.4%, in line with expectations, strengthening forecasts that the Fed would keep interest rates unchanged at its September meeting.
Ongoing selling pressure in the crypto market also contributed to Bitcoin’s weak response. BTC has traded within a broad range of $60,000 to $67,000 for several weeks, while attempts to remain above $64,000 have failed to develop into a sustained rally.
Pressure on the Fed to raise rates could ease
The slowdown in producer inflation added to the data limiting the likelihood of another near-term Fed rate hike. A decline of 23,000 in US nonfarm payrolls in July and easing consumer inflation also support expectations that interest rates could remain unchanged.
However, annual core PPI remaining at 4.2% indicates that price pressures have yet to disappear completely. Upcoming employment and inflation data will be decisive for the Fed’s September decision.
The crypto market’s short-term agenda now includes US retail sales data scheduled for August 14. A weaker-than-expected reading could further reduce the possibility of a rate hike, while strong consumer spending figures could keep macroeconomic pressure on Bitcoin elevated.
