Wholesale prices in the United States have just plunged to their lowest level in five years, marking a major win for President Donald Trump’s economic agenda.
The Producer Price Index (PPI) fell 0.5% in April, the U.S. Bureau of Labor Statistics (BLS) reported on Thursday.
The index measures the average change over time in selling prices received by domestic producers.
The figure marks the biggest PPI drop in five years
It is also the first time that the PPI has declined since October 2023.
Since last April, producer prices rose 2.4% under former President Joe Biden.
However, even that figure was a significant deceleration from the 3.4% year-over-year gain in March, according to the Associated Press.
The producer price drop defies economists’ predictions.
Economists had forecast that producer prices would rise last month.
Services prices, the prices charged by domestic producers for the services they provide, dropped 0.7% in April.
This was the biggest drop since the index began in December 2009, according to the BLS.
Wholesale food prices dropped 1% last month, including a 39% drop in egg prices.
The report is the second round of economic news being celebrated by the Trump administration this week.
On Tuesday, the Labor Department reported that inflation hit its lowest point in four years.
The consumer price index was up just 2.3% from April 2024, the smallest year-over-year gain since February 2021.
POLITICO reported on Wednesday that the inflation report has surprised economists as “there was broad anticipation that Trump’s levies on Chinese imports, steel and aluminum, and certain Canadian and Mexican products had caused prices for apparel, electronics, and other consumer goods to spike.”
The outlet noted that “the opposite has occurred” as the cost of clothing and new cars, which were supposed to take the brunt of Trump’s tariffs, both dropped.
Economists continue to predict that Trump’s tariffs will drive up prices, with increases likely hitting American consumers over the summer.
As Trump continues to negotiate trade deals, however, those forecasts could change.
Some businesses still insist that they expect consumers to soon feel the pinch of Trump’s tariffs.
Walmart said it will likely raise prices as soon as this month due to tariffs, CNN reported.
“We will do our best to keep our prices as low as possible,” Walmart CEO Doug McMillon said on Thursday during an earnings call.
“But given the magnitude of the tariffs, even at the reduced levels announced this week, we aren’t able to absorb all the pressure given the reality of narrow retail margins.”
“The higher tariffs will result in higher prices,” he added.
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