U.S. producer prices fell unexpectedly last month, dropping 0.1% from July.
The Labor Department reported Wednesday that its producer price index—which captures inflation in the supply chain before it hits consumers—showed that wholesale inflation decelerated in August after advancing 0.7% in July. Wholesale services prices fell 0.2% from July on smaller profit margins at retailers and wholesalers, which might be a sign that those companies are absorbing the cost of President Donald Trump’s sweeping tariffs on imports.
Compared with a year earlier, producer prices rose 2.6%.
Excluding volatile food and energy prices, so-called core producer prices also fell 0.1% from July and were up 2.8% from a year earlier.
The numbers were lower than economists had forecast. Trump’s tariffs were widely expected to send prices higher, but so far their impact has been muted. “The big picture remains that tariff effects are feeding through only slowly,’’ economist Stephen Brown of Capital Economics wrote in a commentary.
“Wholesalers and retailers have been slow to pass on the cost of tariffs,” says Bill Adams, chief economist at Comerica Bank. “This could be due to foreign suppliers discounting to maintain market share, to weak demand in the U.S., or to businesses waiting to pass on costs until they have clarity about where tariff rates settle out.’’
Still, Adams notes that some prices of imported products rose, pointing to coffee prices—up 6.9% from July and 33.3% from a year earlier.
