U.S. wholesale inflation decelerated last month, suggesting that price pressures are easing for now. But the progress may not last as President Trump intensifies his trade wars.
The Labor Department reported Thursday that its producer price index—which tracks inflation before it reaches consumers—was unchanged from January after rising 0.6% the month before. Compared to a year earlier, producer prices were up 3.2%, down from a year-over-year gain of 3.7% in January.
Excluding volatile food and energy prices, so-called core wholesale prices fell 0.1% last month from January―the first drop since July. Core producer prices rose 3.4%, lower than the 3.8% year-over-year gain in January. The numbers were all lower than economists had expected.
The readout comes as Trump ramps up his trade war with a wide range of U.S. trade partners, threatening to send inflation higher. He has effectively imposed 25% taxes—tariffs—on foreign steel and aluminum and has plastered 20% levies on Chinese imports. In coming weeks, he is set to impose 25% tariffs on Canada and Mexico and to introduce “reciprocal tariffs’’ that match higher taxes that other countries slap on U.S. products. And on Thursday the president threatened a 200% on European wine, champagne and spirits if Europe goes ahead with a tariff on U.S. whiskey.
