February US wholesale prices unchanged showing inflation easing, though
trade wars threaten trend
[March 14, 2025] By
PAUL WISEMAN
WASHINGTON (AP) — 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, 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.
Major retailers have warned that they expect U.S. consumers to pull back
spending this year in the face of higher costs, partially from from
Trump's tariffs.
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 On Wednesday, the Labor Department
said that consumer price inflation slowed last month for the first
time since September. The consumer price index was up 2.8% from a
year ago, down from a 3% year-over-year increase in January. Core
consumer prices rose 3.1% from a year earlier, smallest increase
since April 2021.
Wholesale gasoline prices fell 4.7% last month. Food prices rose
1.7% from January to February, led by a 28% surge in the price of
eggs.
After cutting its benchmark rate three times in late 2024, the
Federal Reserve is expected to leave the rate unchanged at its
meeting next week. “The Fed will not see any argument for pushing
interest rates lower or sooner in today’s figures,” Carl Weinberg
and Mary Chen of High Frequency Economics wrote in a commentary
Thursday. “The Fed is focused now on the impact of tariffs on future
food prices much more than it is focused on the impact of egg prices
on prior (producer price) increases.’’
Wholesale prices can offer an early look at where consumer inflation
might be headed. Economists also watch it because some of its
components, notably health care and financial services, flow into
the Federal Reserve’s preferred inflation gauge — the personal
consumption expenditures, or PCE, index. Thomas Ryan of Capital
Economics noted that some of the wholesale prices that feed into the
PCE measure, including hospital costs and international airfares,
came in hotter than expected in February.
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