{"id":7413,"date":"2026-02-20T21:33:11","date_gmt":"2026-02-20T21:33:11","guid":{"rendered":"https:\/\/www.rbc.com\/en\/economics\/?p=7413"},"modified":"2026-04-03T00:04:53","modified_gmt":"2026-04-03T00:04:53","slug":"ppi-pressures-overshadowed-by-tariff-rulings","status":"publish","type":"post","link":"https:\/\/www.rbc.com\/en\/economics\/us-week-ahead\/ppi-pressures-overshadowed-by-tariff-rulings\/","title":{"rendered":"PPI pressures overshadowed by tariff rulings"},"content":{"rendered":"\n
\n
\n
\n
\n
\"\"<\/figure>
\n

Next week is quiet on the data front but will give markets time to digest the news of the US Supreme Court striking down IEEPA<\/a> tariffs. While the decision appears to be a major blow to the administration\u2019s tariff agenda, it remains likely that this administration will pursue tariffs through other avenues. Whether importers will be entitled to refund and what those refunds look like remain to be seen. Either way, this new development, if sustained, improves inflation\u2019s trajectory and could boost growth prospects this year after the government shutdown distorted the Q4 2025 GDP Advance print<\/a>.<\/p>\n<\/div><\/div>\n<\/div>\n<\/div>\n\n\n\n

At this juncture, we are giving more weight to the PCE measure of inflation over CPI because housing-related data quirks are disproportionately impacting CPI. This stems from the government shutdown (in Q4 2025). The fact that the PCE inflation continues to run hotter than CPI (core PCE 3.0% y\/y vs core CPI +2.5% y\/y) adds conviction to our view that focus should be on PCE in the coming months for a better read on inflation\u2019s path because housing carries more weight in CPI.<\/p>\n\n\n\n

With that in mind, next week\u2019s PPI release will be especially important to give us more direction on the trajectory of PCE in January. We expect to see another reasonably hot PPI print \u2013 with both headline and core price growth rising +0.5% m\/m in January, nudging the year-over-year prints up to 2.8% and 3.2% for headline and core respectively.<\/strong> In December, a massive upside in PPI was driven by a spike in wholesale trade for machinery and equipment, suggesting that wholesalers were likely passing off higher costs along the supply chain. Medical care services will be less important with respect to January tariff passthrough but will be important for estimating the direction of PCE since the medical sector bears relatively more weight in the PCE basket compared to CPI. If medical care services were to heat up, this would be an important clue for the direction of the January PCE release, slated for March 13th<\/sup>.<\/p>\n\n\n\n

Aside from PPI, here\u2019s what else we\u2019re watching next week:<\/a><\/p>\n\n\n\n