Producer Prices Hold Steady in June as Inflation Pressures Ease

WASHINGTON — Wholesale inflation in the U.S. showed no increase in June 2025, offering relief to policymakers and consumers amid concerns that President Donald Trump’s tariffs would push prices higher.

The U.S. Department of Labor reported Wednesday that its Producer Price Index (PPI) remained unchanged from May, following a 0.3% rise the month before. On a year-over-year basis, prices rose just 2.3%, the smallest annual gain since September. Both figures fell below economists’ expectations (source).

Core producer prices — excluding food and energy — also held steady, rising 2.6% year-over-year.

Tariffs Show Mixed Effects on Inflation

The inflation report comes a day after consumer prices were reported to have risen 2.7% over the same period, the highest since February, largely driven by rising import costs. However, wholesale and consumer prices don’t always follow the same trend.

According to Bradley Saunders, North America economist at Capital Economics, Trump’s tariffs showed some impact:

  • Furniture prices rose 1%.

  • Home electronics increased by 0.8%.
    These categories rely heavily on imports, particularly from China and East Asia.

Yet, prices at steel mills fell 5.5%, despite Trump’s 50% tax on imported steel. Some companies may still be operating with pre-tariff inventory, helping to suppress price hikes.

“We are not out of the woods yet,” Saunders warned, noting that new tariffs on Japanese and South Korean imports are set to take effect on August 1 (source).

Auto Retailers Absorb the Blow — For Now

The report also showed a 5.4% drop in profit margins for auto retailers, suggesting dealers are absorbing Trump’s 25% auto tariff — a move that helped lower new vehicle prices for consumers in June.

But economists caution this won’t last.

“Auto retailers won’t absorb the tariffs indefinitely,” wrote Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics.

Why It Matters

Wholesale prices offer early indicators of future consumer inflation. Some PPI components feed directly into the Federal Reserve’s preferred inflation metric, the Personal Consumption Expenditures (PCE) index.

After raising rates aggressively in 2022 and 2023 to fight inflation, the Fed has become more cautious in 2025. Trump’s push for rapid rate cuts has raised concerns about the central bank’s independence and its ability to respond effectively to evolving inflationary threats (source).