Core PPI Rises Only 0.1%, Below Expectations
Wholesale Inflation Also Moderates Following Retail Price Trends
The U.S. Producer Price Index (PPI) for last month rose less than market expectations. Both goods and services prices saw only slight increases, indicating that the impact of President Donald Trump's tariffs has been limited.
According to the U.S. Department of Labor on June 12 (local time), the PPI for May 2025 increased by 0.1% compared to the previous month. This marked a turnaround from April, when the index fell by 0.2%, but it was still below the market forecast of a 0.2% rise.
The core PPI, which excludes volatile food and energy prices and reflects the underlying trend of inflation, also rose by 0.1% from the previous month. This was a rebound from April's 0.2% decline, but it fell short of the expected 0.3%. Core goods prices, excluding food and energy, rose by only 0.2%, while core services prices increased by just 0.1%.
The PPI growth rate, often referred to as wholesale inflation, has been slowing for four consecutive months. Despite President Trump’s aggressive tariff policies, companies appear to be holding off on price increases, even as tariff burdens rise. The Consumer Price Index (CPI), a measure of retail inflation released the previous day, also rose by 2.4% year-on-year in May, coming in below the forecast of 2.5% and easing concerns about inflation. However, there remains a variable: if companies begin to fully pass on tariff costs to prices in the second half of the year, inflationary pressures could increase.
Carl Weinberg, chief economist at High Frequency Economics, stated, "There are no signs of price shocks from tariffs in the figures released today," and added, "Since President Trump announced tariffs on April 2, it is difficult to find any items in this report that show a price increase."
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