PPI Inflation "Picky" (Headline 2.7%) vs. Cooling Nucleus (Core 2.6%). The EDF Is Trapped, and the Labour Market Now it's the Final Arbiter.

Igor Pereira · November 25, 2025

We have just received data from the September PPI (Productor Price Index), and it is the nightmare of any analyst: a mixed data. The main number (Headline) came a little warmer than expected, while the core (Core) came a little cooler.

By Igor Pereira, Financial Market Analyst, Junior Member WallStreet NYSE

That doesn't give the Fed a green light to cut interest, nor a red light to stop. It is a flashing yellow light that increases volatility and dependence on the next big data: the labour market.

1. The Numbers Dissection

Headline PPI (Anual): It came in 2.7%, slightly above expectations of 2.6%.
- Interpretation: General inflation, driven by volatile energy costs, is still stubborn. That gives ammo to the EDF Hawks who want to keep interest high.
Core PPI (Anual): It came in 2.6%, slightly below the 2.7% expectation.
- Interpretation: Excluding food and energy, the underlying inflationary pressure is cooling. That gives ammo to the Fed doves who want to cut interest.

My Analysis (Igor Pereira): This "match" result means that the EDF cannot use inflation as the main excuse for its December decision. The inflationary argument is neutralized.

2. The New Narrative: The Labour Market is Everything

With inflation at an impasse, the macroeconomic focus changes completely for the labour market.

The Thesis: The EDF is no longer fighting a war of inflation; it is fighting a war to prevent a recession.
The Signal: As we have seen in previous analyses, the labour market is weakening (negative payroll reviews, high unemployment).
Conclusion: The EDF will be forced to cut interest in December, not because it has won inflation, but because it needs to save the economy from a job collapse.

Williams and Daly (Powell's allies) had already indicated this focus on employment. Today's mixed IPP only reinforces that this will be the decisive battle.

3. The Market Reaction (What to Do Now)

Dollar (USD): It should be volatile and without clear direction in the short term, reflecting the confusion of the data.
Gold (XAU/USD): The uncertainty and increasing likelihood that the EDF will focus on employment (and therefore cut interest) are positive for gold. Any initial fall due to the higher Headline PPI should be seen as an opportunity.
Actions (US30/NAS100): They'll be stuck and volatile. The market wants the cut, but the PPI did not give absolute certainty. Fear of the "AI bubble" and dependence on employment data will dominate the feeling.

Conclusion of Igor Pereira: December You're Back at the Table

Today's mixed PPI wasn't the slam dunk the bulls or bears wanted. However, by eliminating inflation as the only decisive factor, it reopens the door to a cut in December. The EDF cannot afford to ignore the weakness of the labour market with an inflation that is cooling at its core.

Prepare for volatility. The next employment report (NFP) will be the most important event of the year.

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