WASHINGTON (AP) — U.S. wholesale inflation slowed down last month, indicating a temporary relief from price pressures. However, this progress may be short-lived as President Trump escalates his trade conflicts. The Labor Department announced on Thursday that the producer price index remained steady in February after a 0.6% increase in January. Year-over-year, producer prices rose by 3.2%, down from January’s 3.7% gain. Excluding food and energy prices, core wholesale prices dropped by 0.1% from January to February, marking the first decline since July. Core producer prices increased by 3.4% year-over-year, lower than the 3.8% gain in January and below economists’ expectations.
Trump’s trade war actions are expected to raise inflation levels, with tariffs on foreign steel, aluminum, and Chinese imports already in effect. Additional tariffs are planned for Canada, Mexico, and potentially Europe, posing a threat of higher costs for consumers. Retailers anticipate reduced consumer spending due to increased prices resulting from these tariffs.
Consumer price inflation also slowed last month, with the consumer price index rising by 2.8% from a year ago, down from a 3% increase in January. Core consumer prices increased by 3.1% year-over-year, the smallest rise since April 2021. Wholesale gasoline prices dropped by 4.7%, while food prices saw a 1.7% increase, driven by a significant surge in egg prices.
The Federal Reserve, after cutting rates three times in late 2024, is expected to maintain rates at its upcoming meeting, given the current economic conditions. Wholesale prices are closely monitored as they provide insight into potential consumer inflation trends. Some components of wholesale prices, such as health care and financial services, influence the Federal Reserve’s preferred inflation index. Analysts have noted that certain wholesale prices, like hospital costs and international airfares, were higher than anticipated in February, impacting future inflation projections.
