Key facts
- US Producer Price Index for final demand was unchanged in July, below forecasts of a 0.2% rise.
- The annual increase in producer prices was 4.7%, lower than the anticipated 4.9%.
- Core PPI, excluding food, energy, and trade services, rose 0.2% month-over-month, the smallest gain since June 2015.
- Bitcoin's price rose 0.58% to $63,728.09 following the inflation data.
Bitcoin experienced a surge on Thursday, driven by US producer inflation data that indicated a cooling trend, alleviating market concerns about ongoing price pressures. The Producer Price Index for final demand remained unchanged in July, contrary to economists' forecasts of a 0.2% rise. Annually, producer prices increased by 4.7%, falling short of the projected 4.9%.
Core PPI, which excludes volatile food and energy components, saw a modest 0.2% rise from June, marking the smallest monthly gain since June 2015. The annual core reading was 4.2%, aligning with expectations. The unchanged headline PPI was primarily due to falling prices in goods, while services and construction prices saw increases.
Energy prices contributed significantly to the overall decline, dropping 3.1% for the month, with gasoline prices alone falling 5.7%. This easing inflation data could lead to a less hawkish stance from the Federal Reserve, potentially prompting interest rate cuts and making riskier assets like cryptocurrencies more attractive.
Following the release, Bitcoin's price climbed 0.58% to $63,728.09. Traders reacted positively to the news, anticipating that lower interest rates could drive capital towards higher-yielding, more volatile assets. However, the market remains watchful for further inflation and economic data to confirm a sustained global cooling trend, as prices excluding food, energy, and trade services still showed a 4.7% annual increase.