Low Wholesale Price Gains Indicate Tariff Plans Aren’t Driving Inflation Higher

NEW YORK, NY - APRIL 11: A pedestrian walks past a Nordstrom Rack store in the Herald Square neighborhood of Manhattan, April 11, 2018 in New York City. U.S. consumer prices rose 2.4 percent in March from a year earlier, the fastest annual pace in 12 months. The U.S. Labor …
Photo by Drew Angerer/Getty Images)

The Trump administration’s tariff plans have not driven up wholesale prices.

The producer-price index, a measure of prices charged by business for their goods and services, rose a seasonally adjusted 0.1 percent in April, the Labor Department said on Wednesday. Economists surveyed by Reuters had expected a monthly increase of 0.3 percent.

The smaller than expected rise is a sign inflationary pressures in the economy remain low. The rise was the lowest since December, when producer prices were unchanged.

So-called core PPI, which excludes the volatile food and energy categories, rose 0.2% in April, hitting economists’ expectations on the nose. However, once the other volatile category–trade services–is excluded, prices rose just 0.1%. Economists had forecast a 0.4% gain when removing the volatile categories, according to the Wall Street Journal.

On a year-over-year basis, producer prices were up 2.6% in April, the smallest annual increase since December.

Many of the tariffs proposed by the administration have not yet kicked in, so it may be early to assess their effects on consumer prices. Yet many critics of the Trump administration’s tariff plans said that they could drive prices up even before they were implemented as consumers and businesses rushed to buy goods ahead of the policy. That does not appear to be happening.