The August producer price index (PPI) report delivered yet another blow to the doomsayers who predicted President Donald Trump’s tariffs would ignite inflation. Instead of climbing, the Bureau of Labor Statistics (BLS) said producer prices for final demand fell 0.1 percent in August.
Economists had expected a 0.3 percent gain, once again showing that Wall Street’s establishment economists are still attached to the tarifflation narrative. Year-over-year, PPI rose just 2.6 percent, far below forecasts of 3.3 percent. The revision to July also tilted the trend lower, with the prior 0.9 percent jump reduced to 0.7 percent. Reality has undercut the claim that tariffs would produce a cascade of price hikes.
Margins Collapse Again and Goods Prices Barely Budged
The biggest drag on prices came from services, where prices dropped 0.2 percent. The most important driver was a 1.7 percent plunge in “trade services,“ the Bureau of Labor Statistics measurement of markups wholesalers and retailers charge. Businesses are clearly absorbing higher costs rather than passing them on. If tariffs were a “national sales tax” on consumers, as Kamala Harris and countless Wall Street economists claimed, these margins should be holding steady or rising. Instead, they are shrinking—just as they did in April and June.
Final demand goods edged up just 0.1 percent, thanks to declining energy prices. Excluding energy and food prices, final demand goods prices climbed 0.3 percent. Service prices fell 0.2 percent. Prices of personal consumption goods were completely flat for the month, indicating that consumers are not being squeezed by tariffs. Personal home electronic equipment prices were flat. Household appliance prices fell 0.5 percent. Car prices climbed just 0.2 percent. Household furniture prices rose 0.2 percent, and commercial furniture prices were flat. Clothing prices for men and boys declined 0.1 percent, and clothing prices for women and girls were flat. (Ed note: We have the PPI and the CPI. The CPI stands for the Consumer Price Index.) (Read More)
