US Wholesale Prices in June raises Questions about Tariff Impact on Inflation

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US wholesale prices remained flat in June, contrary to expectations of a 0.2% increase. The producer price index (PPI) showed no change, according to the Bureau of Labor Statistics. Despite the subdued headline and core wholesale inflation, final demand goods prices rose 0.3%, offset by a 0.1% decline in services. Tariff-sensitive communication equipment posted a 0.8% gain

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Year-over-year, headline PPI was up 2.3%, and core PPI was at 2.6%, both above the Federal Reserve’s 2% target. President Trump repeated demands for the Fed to lower interest rates, saying it would help reduce borrowing costs. However, markets see little chance of a rate cut in July and have reduced odds for September.

The Federal Reserve remains cautious about the impact of tariffs on inflation, with Fed Chair Jerome Powell stating, “We should start to see this over the summer, in the June numbers and the July numbers.” The Fed believes the US economy is strong enough to wait and observe the effects of tariffs before acting on rates.

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