Topline
Wholesale prices declined unexpectedly in August after Wall Street anticipated an increase, according to data released Wednesday by the Bureau of Labor Statistics, whose report on consumer prices comes later this week as the Federal Reserve debates interest rates.
A report on wholesale prices precedes consumer price data due later this week, as the Federal Reserve debates interest rates.
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Key Facts
The producer price index—measuring costs across several goods and services—decreased 0.1% in August from July, the Bureau of Labor Statistics reported, after economists expected a 0.4% rise, according to FactSet.
A decline in August marks the first decrease for wholesale prices since a 0.3% drop in April.
Bill Adams, Comerica Bank’s chief economists, said in a note Wednesday a decline comes as wholesalers and retailers have been “slow to pass on the costs of tariffs” to consumers, which Adams said could be attributed to suppliers discounting to maintain market share, weak demand in the U.S., or businesses waiting to pass on costs until they “have clarity about where tariff rates settle out.”
Headline PPI increased by 2.6%, well below estimates for a 3.3% rise and July’s 3.1%, while core PPI, which excludes food and energy prices, also fell unexpectedly by 0.1% after projections for a 0.3% increase.
Price hikes in August were largely driven by a 2.3% increase in prices for tobacco products, the BLS said, while portfolio management costs and coffee prices climbed 2% and 6.9%, respectively.
What To Watch For
Consumer price index data will be released Thursday by the BLS, as economists expect inflation to jump to 2.9% in August from 2.7% in July, according to FactSet. The report will be the last broader economic report under consideration by the Fed before its next policymaking meeting on Sept. 17. Cooler-than-expected inflation would likely raise prospects for the central bank cutting interest rates, held between 4.25% and 4.5% since December, though investors already have high hopes: Wall Street has placed 100% odds of a rate cut, according to CME Group’s FedWatch tool.
Crucial Quote
President Donald Trump lauded the wholesale prices report: “Just out: No inflation!” Trump added calls for the central bank and Fed Chair Jerome Powell to ease interest rates.
Key Background
A lighter report on wholesale prices decreasing follows recent unemployment and jobs data that signaled a worsening labor market. The BLS reported last week the unemployment rate ticked up to 4.3% in August, above Wall Street’s forecasts, while marking the first report by the agency since Trump ousted Erika McEntarfer as its chief last month following allegations of data manipulation. The jobs report indicated the U.S. had slightly more unemployed people (7.2 million) than job openings (7.18 million) for the first time since April 2021, as ADP’s chief economist Nela Richardson warned the labor market had been “whipsawed with uncertainty.” Earlier this week, the BLS reported that employers added 911,000 fewer jobs in the 12 months ending March 2025 than originally reported, totaling about 849,000 over the period. The agency’s downward revision was criticized by the White House and Vice President JD Vance, who wrote it was “difficult to overstate how useless BLS data [has] become” while noting the revision should “restore confidence” in the agency.
Further Reading
Source: https://www.forbes.com/sites/tylerroush/2025/09/10/trump-applauds-rare-positive-economic-report-wholesale-prices-unexpectedly-fell-last-month/
