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WASHINGTON (AP) — U.S. wholesale prices dropped unexpectedly in April for the first time in more than a year despite President Donald Trump’s sweeping taxes on imports.
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The producer price index — which tracks inflation before it hits consumers — fell 0.5% last month from March, the first drop since October 2023 and the biggest in five years. Compared to a year earlier, producer prices rose 2.4% last month, decelerating from a 3.4% year-over-year gain in March, the U.S. Labor Department reported Thursday.
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Excluding volatile food and energy prices, so-called core wholesale prices dipped 0.4% from March and rose 3.1% from a year earlier.
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Economists had forecast that producer prices rose modestly in April.
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Services prices fell 0.7%, the biggest drop in government records going back to 2009, on shrinking profit margins at wholesalers and retailers. Wholesale food prices fell 1%, and egg prices plunged 39%, though they are still up nearly 45% from a year ago because of bird flu.
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On Tuesday, the Labor Department reported that consumer prices rose just 2.3% last month from April 2024 — smallest year-over-year gain in more than four years.
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Economists have predicted that Trump’s tariffs would drive up prices, and many expect the impact to show up in June or July.
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Still, Trump’s tariffs are ever-changing, so it’s hard to forecast their economic impact. On Monday, for instance, Trump unexpectedly agreed to a massive de-escalation of his trade war with China — third-biggest source of U.S. imports — by scaling back his taxes on Chinese products to 30% from 145%; China slashed its retaliatory tariffs on U.S. products from 125% to 10%.
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