Key Takeaways
- The Producer Price Index showed that wholesale prices rose by 0.1% in May, less than economists expected, while annual wholesale price increases were in line with estimates.
- A consumer inflation report yesterday also showed prices weren’t rising as fast as expected in response to President Donald Trump’s tariff policies.
- Economists did see some signals of increased inflation in the report, especially in rising prices for appliances, computer equipment, machinery, and vehicle wholesaling.
Economists are expecting a jump in inflation from President Donald Trump’s tariff policies, but once again it failed to show up in the latest pricing data.
Prices at the wholesale level came in lower than expected in May. That comes after yesterday’s consumer pricing data also failed to reveal an expected jump in inflation.
The Bureau of Labor Statistics’ Producer Price Index (PPI) showed prices rose 0.1% in May from April. Economists surveyed by The Wall Street Journal and Dow Jones Newswires expected a larger increase of 0.2%. The April reading showed wholesale prices were down 0.2% from the prior month.
On an annual basis, wholesale prices in May grew by 2.6%, in line with projections by Wells Fargo economists and an increase from last month’s reading of 2.4%. Core wholesale inflation, which takes out volatile food and fuel prices, also increased less than expected in May.
“Concerns about widespread increases in producer prices due to tariffs continue to be dissuaded. Cheaper costs for diesel and jet fuel helped to mute the headline gains with total intermediate goods only up modestly in May,” Nationwide Senior Economist Ben Ayers wrote.
Signals of Higher Tariffs Costs Show Up in Some Products
While price pressures continue to remain tame, economists said the report did show signs that inflation is working its way through the system following the implementation of U.S. tariffs.
The report noted that prices for machinery and vehicle wholesaling jumped 2.9%, while appliances and computer equipment costs also rose in May.
“The softer headline gain for the PPI in May hides much of the underlying cost pressures faced by producers. Tariff impacts are steadily flowing into prices for inputs, especially for metals, which is raising production costs for machinery and vehicles,” Ayers added.
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