Key takeout
Economists are hoping for a surge in inflation from President Donald Trump’s tariff policies, but have yet to make it again in the latest pricing data.
Wholesale-level prices were lower than expected in May. This is after yesterday’s consumer price data also failed to reveal the expected jump in inflation.
The Bureau of Labor Statistics’ Producer Price Index (PPI) showed prices rose 0.1% between April and May. Economists surveyed by the Wall Street Journal and Dow Jones Newswires expected a significant increase of 0.2%. Readings for April showed that wholesale prices had dropped by 0.2% from the previous month.
Every year, wholesale prices in May increased by 2.6%, up from forecasts by Wells Fargo Economists and 2.4% reading last month. Core wholesale inflation, which extracts volatile food and fuel prices, also rose more than expected in May.
“Concerns about widespread rise in producer prices due to tariffs continue to be reminded. The low costs of diesel and jet fuel helped mute headline profits with modest general goods in May.”
Some products will display a higher tariff cost signal
Price pressure continues to be tame, but the economists said the report shows signs that inflation is working through the system following the implementation of US tariffs.
The report noted that the prices of wholesale machinery and vehicle increased by 2.9%, and costs of electrical and computer equipment also rose in May.
“The gains of the softer headlines of PPI in May hide much of the underlying cost pressures facing producers. The impact of tariffs is steadily flowing in the prices of metal inputs, particularly those that are increasing production costs for machinery and vehicles,” added Ayers.
