The producer price index (PPI) in the United States ticked up 0.1% in May, lifting the annual rate to 2.6%, a slower climb than what analysts predicted, according to figures released Thursday by the Bureau of Labor Statistics.
Economists surveyed by Bloomberg had expected a 0.2% increase, but the monthly rise came in weaker. The core PPI, which excludes food and energy, also rose by 0.1%, showing that pricing power across the economy is still soft as summer begins.
The report showed goods prices, excluding food and energy, climbed 0.2%, while services prices increased 0.1%. The small bump in services was mostly driven by improved wholesale margins, especially in vehicle and machinery sales, which recovered after a drop in April. With price growth staying tame, May becomes the fourth straight month where inflation hasn’t gained serious traction.
Retail and wholesale margins rebound after April dip
The PPI data landed just one day after May’s consumer price index also showed soft inflation . That makes it harder for companies to raise prices without getting crushed on the bottom line. Economists warned that pressure might build up later in the year as more tariffs kick in and businesses look for ways to protect profit margins.
One section of the PPI report that grabbed attention was the rebound in wholesaler and retailer margins, which rose in May after falling the previous month. These increases were sharpest in vehicle and machinery wholesaling.
But with trade headlines changing every other week, those margins have been bouncing around all year. Nothing stable. No pattern. And everyone’s still waiting to see how Trump’s next tariff threats shake out.
Some parts of the PPI also feed directly into the Federal Reserve’s personal consumption expenditures (PCE) index, which is its preferred inflation gauge. For May, those pieces of the puzzle looked weak. Airfares dropped. Portfolio management fees fell. Healthcare costs were flat. The full PCE report is expected later this month, but if these trends hold, it’s likely to mirror the soft tone from the PPI.
Trump pushes tariff letters ahead of July deadline
At the same time, the report dropped during a week when US trade tensions hit another wave. President Donald Trump has been trying to rework deals with trading partners ever since he reentered the White House.
In April, he slapped new tariffs on multiple countries. And just this Wednesday, the administration announced a deal with China , but left most of the existing tariffs in place. The White House said the current levels on Chinese imports will stay well above the pre-2021 rates.
Trump also told reporters he plans to send letters to foreign governments over the next one to two weeks. Those letters will spell out new unilateral tariff rates, just before a July 9 deadline when the US is set to bring back higher duties on dozens of countries.
“We’re going to be sending letters out, in about a week and a half, two weeks, to countries, telling them what the deal is, like I did with EU,” Trump said on Wednesday.
The situation is also shaking up the markets. As Trump hinted at more tariffs, stock futures slipped Thursday morning. S&P 500 futures were down 0.3%, the Nasdaq 100 dropped 0.2%, and Dow Jones futures slid by 179 points, or 0.4%.
Wall Street’s waiting game continues. Everyone’s watching what happens between the US and China, especially with that July 8 deadline approaching.
Trump said he might give more time for trade negotiations, but also added that he doesn’t think he’ll need to. “We made a great deal with China,” Trump said, “We’re dealing with Japan, we’re dealing with South Korea. We’re dealing with a lot of them.”
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