The latest report on wholesale inflation in the United States has surprised many economists. The producer price index (PPI), which tracks wholesale costs, showed no change in June. This was unexpected, as experts had predicted an increase of at least 0.2%. The Bureau of Labor Statistics released this data, revealing that even the core PPI, which excludes food and energy prices, also remained steady.
This news comes amidst ongoing discussions about the impact of tariffs imposed by President Donald Trump. For months, economists have warned that these tariffs would lead to rising prices for consumers. However, the unchanged PPI suggests that the tariffs might not be affecting the economy as severely as anticipated. Vice President JD Vance remarked on social media that this situation indicates a misunderstanding among economists regarding the effects of tariffs.
On a year-over-year basis, the headline PPI rose by 2.3% in June, which is a slight decrease from 2.7% in May. This marks the lowest annual PPI growth since September 2024. The core PPI also saw a decline, with an annual rate of 2.6%, the lowest since July of the previous year.
This report follows another release from the Bureau of Labor Statistics, which indicated that overall inflation increased by 0.3% month-over-month and 2.7% year-over-year in June. These figures were slightly above what economists had predicted. The White House responded positively to the inflation data, stating that it reflects progress under President Trump’s administration in managing inflation.
As tariffs on various countries are set to take effect on August 1, the administration is using these inflation numbers to advocate for lower interest rates from the Federal Reserve. President Trump has called for a significant rate cut, arguing that lower inflation could save the economy a trillion dollars annually.
The upcoming Federal Reserve meeting at the end of the month is expected to address these economic conditions, with speculation about the potential for changes in leadership as Fed Chair Jerome Powell’s future remains uncertain.