Key Highlights
- U.S. PPI rose 0.4% month over month in August, matching expectations, while annual producer inflation accelerated to 5.4% from 4.8% in July.
- Bitcoin (BTC) fell as low as $76,748 and was trading near $77,021 at 14:14 UTC, after reaching an intraday high of $79,323.
- Fed funds futures moved to price roughly a 70% probability of a 25-basis-point September hike, up from about 65% before the inflation data.
Bitcoin (BTC) dropped below $77,000 on Thursday after the first major U.S. inflation reading of the week showed producer prices rising again in August, adding to concerns that the Federal Reserve may raise interest rates next week.
BTC fell to an intraday low of $76,748 and was trading around $77,021 at 14:14 UTC, down roughly 2.4% on the day, according to coingecko. Bitcoin had traded as high as $79,323 earlier in the session.
The move followed the U.S. Bureau of Labor Statistics’ August Producer Price Index report, which showed final-demand prices rising 0.4% month over month. The reading matched economists’ expectations but accelerated from a revised 0.1% increase in July.
More importantly for the inflation outlook, headline PPI increased 5.4% from a year earlier, accelerating from 4.8% in July. That kept producer inflation elevated just days before the Federal Reserve’s September 15–16 policy meeting.
Energy Prices Push U.S. PPI Higher
The August increase was concentrated heavily in goods prices. Final-demand goods rose 1.1%, while services increased just 0.1%, according to the BLS.
Energy prices climbed 4.2% during August, reversing two consecutive monthly declines. Diesel fuel prices jumped 24.1%, while gasoline, jet fuel and home heating oil prices also increased.
Prices excluding food, energy and trade services rose 0.3% for the month and 4.7% over the past year, indicating that the inflation pressure was not limited entirely to the headline energy move.
The producer-price report was broadly in line with forecasts rather than an upside surprise. However, the acceleration in annual inflation and stronger underlying components were enough to keep markets focused on the possibility of tighter Fed policy.
What the August PPI Report Showed
The Producer Price Index (PPI) tracks the prices US producers receive for goods and services. Markets watch it as an early inflation reading before consumer data. The BLS reported that final demand prices rose 0.4% seasonally adjusted in August, after a 0.1% rise in July and a 0.1% decline in June. Unadjusted, the index was up 5.4% over 12 months.
The monthly figure matched the 0.4% economists had expected, and July was revised to show a 4.8% annual rise. Final demand goods rose 1.1%. Energy, up 4.2%, accounted for more than three-quarters of that gain, and diesel fuel, up 24.1%, accounted for over a third of it.
Core measures came in lower. Prices excluding foods, energy and trade services rose 0.3% in August and 4.7% over 12 months. The measure excluding food and energy rose 0.2%, below a 0.3% forecast. Its annual rate reached 4.6%, up from 4.3% in July.
September Fed Hike Odds Rise to 70%
Interest-rate markets became slightly more hawkish after the report. Traders were pricing roughly a 70% probability of a 25-basis-point Fed rate hike next week, according to LSEG’s interest rate probabilities data. The probability stood near 65% before Thursday’s data.
The Fed has held its benchmark rate at 3.50%–3.75% since December, but persistent inflation and the recent improvement in labor-market data have strengthened the case for another increase.
That repricing has been building since the stronger-than-expected August employment report. As The Crypto Times reported last week, payrolls increased by 162,000, initially pushing Bitcoin below $80,000 as traders raised their expectations for a September hike.
Bitcoin had also entered Thursday under pressure after rising Treasury yields erased an earlier rebound. BTC gave up gains on Wednesday even after the U.S. Treasury announced a $6 billion long-term bond buyback.
CPI Is Bitcoin’s Next Inflation Test
Thursday’s PPI was only the first of this week’s two major U.S. inflation releases.
The Consumer Price Index for August is due Friday, giving policymakers their final major inflation reading before the September 15–16 Fed meeting. Reuters noted that markets are likely to place greater weight on the core CPI figure when assessing whether the Fed will act next week.
That leaves Bitcoin facing another potentially volatile macro session. A CPI print that reinforces Thursday’s inflation picture could keep rate-hike expectations elevated, while softer consumer inflation could reverse part of the repricing seen after payrolls and PPI.
For now, Bitcoin’s fall below $77,000 marks a second major macro-driven decline in less than a week, with the Fed decision now only days away.
Also Read: BTC, ETH, XRP Prices Consolidate Ahead of U.S. CPI and PPI
