U.S. wholesale prices fell unexpectedly in April for the first time in more than a year, despite President Donald Trump’s broad tariffs on imports.
The producer price index — which tracks inflation before it reaches consumers — dropped 0.5% last month from March, marking the first decline since October 2023 and the largest in five years. Compared with a year earlier, producer prices rose 2.4% in April, down from a 3.4% annual increase in March, the U.S. Labor Department said Thursday.
Excluding volatile food and energy costs, so-called core wholesale prices slipped 0.4% from March and increased 3.1% year-over-year.
Economists had expected a modest rise in producer prices for the month.
Prices for services fell 0.7%, the largest drop in government records dating to 2009, due to shrinking profit margins among wholesalers and retailers. Wholesale food prices declined 1%, with egg prices plunging 39%, though they remain nearly 45% higher than a year ago due to the impact of avian flu.
On Tuesday, the Labor Department reported that consumer prices rose 2.3% year-over-year in April — the smallest annual gain in more than four years.
Economists have warned that Trump’s tariffs would eventually drive up prices, with many predicting the impact will become more evident in June or July.
Still, Trump’s tariff policies are fluid, making their long-term economic impact difficult to predict. On Monday, Trump unexpectedly agreed to a major de-escalation in the U.S.–China trade war, reducing tariffs on Chinese goods to 30% from 145%. China, in turn, lowered its retaliatory tariffs on U.S. goods from 125% to 10%.
“Tariffs have yet to make much of a mark on pricing, though it’s likely just a matter of time,” Sal Guatieri, senior economist at BMO Capital Markets, wrote in a commentary.