Paul Wiseman, AP Economics Writer
WASHINGTON (AP) – U.S. wholesale inflation cooled last month despite concerns that President Donald Trump’s tariffs would push prices on goods higher before they reach consumers.
The Labor Bureau reported Wednesday that it has not changed since last month after the producers’ price index rose 0.3% last month. Wholesale prices for June rose 2.3% from the previous year’s previous year, the lowest profit year-on-year since September. Both measures were below what economists had hoped for.
Excluding unstable food and energy prices, so-called core producer prices have also changed since May, up 2.6% from June 2024.
The wholesale inflation report arrived the day after the Labor Bureau reported that consumer prices had risen 2.7% from June 2024 last month. This is the largest year-over-year since February, as Trump’s drastic tariffs pushed up everything from food to appliances.
However, consumer prices and producer prices do not always move in tandem.
Bradley Saunders, North American economist at Capital Economics, saw signs of Trump’s tariffs affecting a 0.3% rise in core wholesale prices. Furniture prices have risen by 1% since May, and Home Electronics has risen by 0.8%, he said. Both of these types of products are imported in large quantities.
However, producer prices at Steel Mills fell 5.5% despite Trump’s heavy 50% tax on imported steel.
Some companies relied on their inventory to buy the products before Trump deployed his tariffs and to cover the prices. However, Sanders warned that these stocks are falling and that Trump plans to impose stiff tariffs (such as a 25% collection on Japanese and South Korean imports) from August 1st.
“We haven’t left the forest yet,” Sanders wrote in the commentary.
The producer price report suggests that car retailers have dropped 5.4% in profit margins, and that car dealers are eating up the 25% tariff costs on imported cars and auto parts. This may explain why new vehicle prices fell last month in Tuesday’s Consumer Price Report.
“I doubt that auto retailers will continue to absorb tariffs indefinitely,” writes Samuel Toums, chief economist at Pantheon Macroeconomics, but there is room for a much more fall after a surge in sales as he attempted to preempt tariffs on imported vehicles. ”
Wholesale prices allow you to see early where consumers may see more inflation. Economists also closely monitor reports as some of their components, particularly the healthcare and financial services scales flow into the Federal Reserve’s preferred inflation gauge, namely, personal consumption expenditures, or PCE, index.
Inflation began to flare up for the first time in decades in 2021 as the economy rose with unexpected forces from the Covid-19 lockdown. This prompted the Fed to raise its benchmark interest rates 11 times in 2022 and 2023. The higher the borrowing costs, the more it helped to reduce inflation from its peak in 2022.
But this year, it has become cautious while waiting to see the inflationary impact of Trump’s trade policy. Trump has actively stepped up pressure on the Fed, which has been seen as a threat to central bank independence.
Original issue: July 16th, 2025 8:45am EDT
