US Producer Prices Drop Most in Five Years as Companies Absorb Tariff Costs

US producer prices unexpectedly fell in April by the largest margin in five years, with the producer price index dropping 0.5% from March and core wholesale prices declining 0.4%, marking the first monthly decrease in over a year. This decline largely reflects companies absorbing higher costs from tariffs imposed under President Donald Trump, as shrinking profit margins led to reduced prices for services and wholesale food. Despite the drop in wholesale prices, economists warn that the impact of tariffs on consumer prices is likely to become more apparent in coming months. The recent de-escalation in the US-China trade war and tariff reductions may influence future price trends, but the fluid policy environment makes long-term effects uncertain. Consumer sentiment remains weak, with retail and home sales slowing sharply, and some retailers, including major automakers, are holding prices steady or offering discounts to ease concerns about rising costs. Overall, while tariffs have yet to significantly raise consumer prices, businesses are currently mitigating their impact by absorbing costs amid economic jitters.