US Producer Prices Dip Unexpectedly Amid Trade Shifts/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ U.S. wholesale prices fell 0.5% in April — the first monthly decline in over a year — despite President Trump’s new tariffs on imports. The drop surprised economists who expected inflationary pressure from trade policies. Analysts warn the full impact of tariffs may emerge in coming months.
Producer Price Report: Quick Looks
- Producer Price Index (PPI) fell 0.5% in April — largest monthly drop in 5 years
- First monthly decline since October 2023
- Year-over-year wholesale inflation slowed to 2.4% from 3.4% in March
- Core PPI (excluding food and energy) declined 0.4% month-over-month
- Services prices dropped 0.7% — biggest fall since 2009
- Food prices fell 1%, egg prices plummeted 39%
- Trump’s tariff rollback deal with China may be delaying inflation effects
- Consumer inflation also eased in April to 2.3%
Deep Look: Trump’s Tariffs Fail to Lift Wholesale Prices — For Now
WASHINGTON — May 15, 2025
Despite a fresh wave of import taxes from President Donald Trump, U.S. wholesale prices fell 0.5% in April, catching economists off guard and marking the sharpest monthly decline in five years. This downturn in the Producer Price Index (PPI) suggests that inflationary pressures may be easing — at least temporarily — at the industrial level.
According to the Labor Department, the broader PPI rose just 2.4% year-over-year, a notable slowdown from 3.4% in March. The core index, which strips out volatile food and energy costs, fell 0.4% month-over-month, while climbing 3.1% over the past 12 months.
“Tariffs have yet to make much of a mark on pricing, though it’s likely just a matter of time,” said Sal Guatieri, senior economist at BMO Capital Markets.
What’s Behind the Price Drop?
April’s decline was driven largely by:
- A 0.7% drop in services prices, the steepest monthly drop since records began in 2009.
- Shrinking profit margins for wholesalers and retailers, possibly from delayed inventory impacts.
- A 1% drop in wholesale food prices, including a staggering 39% collapse in egg prices, although egg prices are still up 45% year-over-year due to ongoing bird flu outbreaks.
The data follows a report earlier this week showing consumer prices increased just 2.3% annually, their smallest gain since 2020.
Tariffs and Trade Uncertainty Continue
President Trump’s evolving tariff policy has made it difficult to predict economic outcomes.
Just days ago, the White House announced a major rollback of tariffs on Chinese goods, slashing planned duties from 145% down to 30% in exchange for China cutting its retaliatory tariffs from 125% to 10%.
This sudden de-escalation may have contributed to the easing price pressures seen in April — though analysts caution the relief may be short-lived.
“Tariffs aren’t a static policy anymore. They’re negotiation tools, and that’s created an environment of uncertainty,” said one trade economist.
What Comes Next?
Economists widely believe that Trump’s tariffs — particularly if reimposed at full strength — could drive prices higher later this summer. Most expect inflation from the tariffs to appear in June or July, especially as retailers and manufacturers begin absorbing costs into their pricing structures.
Meanwhile, the Federal Reserve is walking a tightrope, with Chair Jerome Powell warning this week that the risks of inflation and unemployment are both rising — a challenging dynamic for monetary policy.
