July PPI Today: Wholesale Inflation Runs 2 Points Hot. Cisco Showed Who Eats It

TL;DR

• July PPI is released at 8:30am ET on Thursday, August 13, alongside initial jobless claims. Consensus wants +0.2% on headline and +0.3% on core month over month, after June printed -0.3%.
• The 12-month line matters more than the monthly one today. Producer prices rose 5.5% in the year to June against consumer prices at 3.5%. That is a 2.0-point gap, and it widened from 1.8 points in May.
• We already know the consumer half of July: 3.4%. So this morning's release resolves the July spread directly, with no waiting.
• Cisco showed what the gap costs when it lands on an income statement. Fiscal Q4 gross margin fell 210 basis points to 66.3% on memory costs, even after roughly 5 points of the company's 18% revenue growth came from price increases.
• Nothing here is a Fed call. September pricing sits near a coin flip and one PPI print is unlikely to move it far.

The Board

Two months of overlap, both with producers paying more. July's red bar is the one printing this morning.

What Time Is the July PPI Report?

8:30am ET on Thursday, August 13, from the Bureau of Labor Statistics. Initial jobless claims land in the same minute, seen at 202,000 against last week's 199,000. The full hour-by-hour timetable for the day is here, including Applied Materials after the close.

Two Points

That is the spread between what producers have been paying and what consumers have. Final demand PPI ran 5.5% in the twelve months to June. CPI ran 3.5% over the same period. In May it was 6.0% against 4.2%.

Both series come from the same agency and cover the same months, so the comparison is clean. I want to be careful about how much weight two months of overlap can carry: this is a spread I can verify, not a trend I can prove. But the direction of the 2026 PPI series is not ambiguous. It went 3.1% in January, 3.4% in February, 4.3% in March, 5.7% in April, 6.0% in May. Consumer inflation never went anywhere near those levels.

Somebody absorbed the difference. In aggregate, that somebody is corporate gross margin.

The monthly prints have been noisier than the annual ones, and June's -0.3% was mostly a gasoline artefact that this site flagged at the time and that has since reversed. Core PPI, on the BLS definition that strips foods, energy and trade services, still ran 5.1% in the year to June.

Cisco Ran This Experiment Last Night

Cisco reported fiscal Q4 after Wednesday's close: revenue of $17.3 billion, up 18%, non-GAAP EPS of $1.22, up 23%, both above guidance. It is about as clean a beat as a large-cap prints.

Non-GAAP gross margin still fell 210 basis points to 66.3%, on a heavier hardware mix and higher memory costs. CFO Mark Patterson told the call that price increases contributed about 5 points of the quarter's revenue growth, with another 4 to 5 points planned for fiscal 2027. Q1 gross margin is guided to 65-66%, below the quarter just reported.

Read those together. Cisco raised prices, and its margin compressed anyway. The stock closed the regular session at $123.88 and traded down to $118.69 after hours, a 4.19% decline on a report with no weak line in it. The full breakdown sits in the earnings hub, and the sector version of the same problem is in the memory cost piece.

My read: that after-hours selling was a margin trade, and this morning's PPI is the macro instrument measuring the same thing across every industry at once.

What I'm Watching at 8:30

The headline monthly number will lead the wires and I think it is the least interesting line in the release. Three things I care about more:

• The 12-month final demand figure. Against a known July CPI of 3.4%, anything at or above 5.4% keeps the gap at two points or wider.
• Services versus goods. June's decline was goods, and it was fuel. Services rose 0.2%. A services-led July print is harder to explain away as a commodity swing.
• Whether the gap narrows from the top or the bottom. Producer inflation falling toward consumer inflation is margin relief. Consumer inflation rising toward producer inflation is pass-through, and it is the version the Fed reacts to.

For a market sitting fractionally below its record, having just watched a clean beat sell off on gross margin, the second version is the one worth a moment's thought. Sector reaction is easiest to read on the heatmap.

The One-Line Read

Producers have paid about two points more than shoppers for two months running. This morning tells us whether July made it three. Cisco already showed what that costs once it reaches an income statement.