US producer prices holds at 2.6% in May; wholesale prices rose 0.1% from April, Fed seen staying cautious on rate cuts
US producer prices rose modestly in May, offering further evidence that inflationary pressures remain subdued even as tariffs continue to loom over global trade, according to data released by the Labor Department on Thursday.
Tired of too many ads? go ad free now
The Producer Price Index (PPI), which tracks inflation at the wholesale level before it reaches consumers, rose 2.6% in May from a year earlier. On a monthly basis, prices increased just 0.1% after a 0.2% decline in April. Both readings came in slightly below economists' expectations, AP reported.
Excluding the often-volatile categories of food and energy, so-called core wholesale prices rose 0.1% from April and 3% from a year earlier.
Energy prices were flat overall, although gasoline rose 1.6% following a decline the previous month. Food prices at the wholesale level edged up 0.1%, while egg prices — which had dropped a sharp 39.3% in April — rebounded by 1.4% in May. Egg prices remain 125% higher compared to May 2024, largely due to supply disruptions from the bird flu outbreak.
The PPI data came a day after the Consumer Price Index showed a similar trend, with consumer inflation rising just 0.1% month-on-month and 2.4% year-on-year in May.
Despite US President Donald Trump's sweeping tariff policy — which includes a 10% baseline levy on nearly all imports and targeted duties on steel, aluminum, and autos — inflation has yet to show a broad-based resurgence. Economists caution, however, that the full effects of the tariffs may emerge later in the year as supply chains adjust and importers pass on higher costs.
The PPI is closely watched because some of its components, such as health care and financial services, are factored into the Federal Reserve's preferred inflation gauge, the Personal Consumption Expenditures (PCE) index.
Tired of too many ads? go ad free now
Inflation surged in 2021 as the economy rebounded sharply from pandemic-era lockdowns, prompting the Federal Reserve to raise interest rates 11 times in 2022 and 2023. Those aggressive hikes helped tame inflation from its 2022 peak, allowing the Fed to cut rates three times last year.
However, the Fed has adopted a more cautious stance in 2025 amid uncertainty over the inflationary effects of recent trade measures. The central bank is widely expected to keep its benchmark rate unchanged at next week's policy meeting.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
22 minutes ago
- Time of India
China, UK trade deals with Trump pile pressure on EU
Representative AI image After London comes Beijing: US President Donald Trump announced a breakthrough in talks with China to put an end to their rapidly escalating tariff war on Wednesday night, though the details of the agreement remain unclear, and key elements are still awaiting formal approval. "Our deal with China is done, subject to final approval with President Xi [Jinping] and me," Trump wrote on his social media platform, Truth Social. "Full magnets, and any necessary rare earths, will be supplied, up front, by China. Likewise, we will provide to China what was agreed to, including Chinese students using our colleges and universities (which has always been good with me!)" One day later, the scope of the deal remains uncertain. Neither Trump nor US officials had clarified which tariffs might be lifted or what concessions were included, according to the Associated Press news agency. Negotiations appear to be ongoing. 'Liberation Day' wounds healing Two months ago, Trump announced a blanket baseline 10% tariffs on virtually all goods imported into the US, an event he dubbed "Liberation Day." Higher country-specific rates followed, with Chinese imports hit particularly hard. Beijing immediately retaliated, with sharp increases of its own, sending bilateral tariffs soaring — peaking at 145% in some cases — on a trade relationship worth $583 billion (approximately €503.5 billion) in recent negotiations have helped bring mutual tariffs down, tensions remain. As of mid-May, US tariffs on Chinese goods averaged 51%, while Chinese tariffs on US goods stood at 33%, according to the Peterson Institute for International Economics, a US think tank. The UK and the US struck a much-vaunted deal one month ago. However, tariffs on key goods remain in place, pending further implementation. Europe treads cautiously Compared to China, the EU has so far opted for a rather restrained approach, with high-level officials engaged in intensive talks. As of April, most EU exports to the US have faced 10% tariffs. Additional 25% duties on steel and aluminum, imposed in March, remain in effect. The bloc has so far avoided the higher rates slapped on EU was poised to hit back with significant countermeasures on everything from whiskey to motorcycles prepared a second package, though both have been paused as EU-US negotiations continue. Brussels is pushing for a "zero-for-zero" trade agreement, aiming to eliminate tariffs on industrial goods. So far, talks have stalled. One of Trump's key complaints is the persistent trade imbalance. In 2024, the US imported significantly more goods from the EU than it exported, with a trade deficit of $216 billion, according to official US figures. However, the EU frequently argues that the US sells far more services to the bloc than the other way round. One option the European Commission, which as the EU executive branch represents the 27 member states in negotiations, has proposed is pushing EU companies and countries to buy more natural gas from the US, a shift that is already well under way since it turned away from Russia following its full-scale invasion of Ukraine in 2022. EU's nuclear option If all else fails for the EU and Trump resorts to 50% tariffs or even higher rates, there has been some discussion of another more radical move from the EU. "Should Europe retaliate if Trump's tariffs hit on 9 July, and how? If yes, then there seems to be general agreement that, beyond tariffs on goods, US digital services are the most likely and vulnerable target," Tobias Gehrke of the European Council on Foreign Relations posted late last month on social media platform Bluesky. Gehrke pointed to the EU's Anti-Coercion Instrument, a legal framework which empowers the EU to target services and could limit US companies' access to public procurement contracts in Europe. It came into effect in 2023, but has never been used, Time is of the essence With talks ongoing, US Secretary of Commerce Howard Lutnick has indicated that the bloc is at the back of the line. "I'm optimistic that we can get there with Europe," Lutnick told US broadcaster CNBC on Wednesday. "But Europe will probably be at the very, very end." On Thursday, US outlet Bloomberg reported that EU officials expect talks to extend beyond the current July 9 deadline, citing unnamed sources close to the negotiators, the pressure to wrap up a deal is enormous. "We'll get this deal done in the best way possible," an EU official told DW on the condition of anonymity. "But it's very clear that not only in the EU institutions, but also around the member states, people just don't want to go through this anymore." "In the volatile world we're in, everyone wants to have reliable trading partners, and the US just isn't that right now," the source added. In the coming days, the G7 and NATO summits in Canada and the Netherlands respectively, might have presented an opportunity for Trump and European Commission President Ursula von der Leyen to meet. However, the European Commission said on Thursday that no bilateral meetings were currently planned. "That could still change," Commission spokesperson Miriam Garcia Ferrer told reporters at a briefing in Brussels.
Time of India
an hour ago
- Time of India
How Trump's trade war with China turned India into America's new iPhone factory, and why 25% tariff threat may not stop it
Apple 's manufacturing partner Foxconn shipped nearly all iPhones exported from India to the United States between March and May, sending 97% of the $3.2 billion worth of devices to American consumers as the tech giant scrambles to navigate President Donald Trump's escalating trade war with China. The dramatic shift marks a complete reversal from 2024, when only half of India's iPhone exports went to the US, with the remainder distributed to European markets including the Netherlands, Czech Republic and Britain, according to Reuters analysis of customs data. Foxconn's India-to-US iPhone shipments have already reached $4.4 billion in the first five months of 2025, surpassing the entire 2024 total of $3.7 billion. Chinese smartphone exports plummet as supply chains shift Chinese smartphone exports to the US plummeted 72% to under $700 million in April, Bloomberg data shows, marking the lowest levels since 2011. Meanwhile, China's phone component exports to India roughly quadrupled over the past year as manufacturers shifted final assembly operations. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Simple. Clean. Solitaire Play Solitaire Download Undo Apple has invested heavily in Indian production capacity, with Foxconn developing a $1.5 billion Chennai plant and lobbying to reduce customs clearance times from 30 to six hours. Tata Electronics, Apple's second Indian supplier, now ships 86% of its iPhone production to the US, up from 52% in 2024. The trade tensions highlight Apple's delicate balancing act between avoiding punitive tariffs and maintaining cost-effective production, as the company historically relied on China for 80% of its annual 220 million iPhone units sold globally. Apple defies Trump's 25% tariff threat on India production Although, Apple doesn't seem to stop its efforts in India despite Trump's threat of putting "at least 25%" tariffs on Indian-made iPhones, unless production moves to the United States. "We are not interested in you building in India," Trump told CEO Tim Cook in May, demanding domestic manufacturing while Chinese-made iPhones face 55% tariffs compared to India's baseline 10% rate. The standoff reflects broader tensions as Trump pushes for domestic manufacturing while Apple pursues cost-effective alternatives to Chinese production. Apple has pledged $500 billion in US investments over four years and CEO Cook personally contributed $1 million to Trump's inauguration fund, yet the company continues expanding Indian operations. Trump's tariff threats also extend to Samsung and other smartphone manufacturers, with the President warning that levies could take effect by the end of June. Industry analysts expect India-made iPhones to account for 25-30% of global shipments in 2025, compared to 18% last year. However, experts warn that fully domestic US iPhone production remains unrealistic, with estimates suggesting a "Made in America" iPhone could cost $3,500 due to supply chain complexity. AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Time of India
an hour ago
- Time of India
Oracle shares soar as AI cloud demand propels revenue forecast
Oracle shares surged nearly 8% in premarket trading on Thursday after the company raised its annual revenue forecast , driven by strong demand for its AI-related cloud services. The stock has risen nearly 6% so far this year as confidence in the software sector remained strong despite geopolitical tensions , even as analysts warn that U.S. President Donald Trump's tariffs could undermine Big Tech's AI investments. Earlier this year, Oracle , whose cloud offerings help companies build their AI infrastructure, announced a joint venture called Stargate to deliver large-scale computing capabilities to OpenAI. "Oracle's once-stodgy image levels up to 'cloud-native mage,' and the competitive map now looks less like a classic three-player real time strategy and more like a battle-royale with everyone dropping in, looking for compute loot", said Michael Ashley Schulman, partner at Running Point Capital Advisors. Oracle expects total revenue to be at least $67 billion for fiscal 2026, CEO Safra Catz said on a post-earnings call. The Texas-based company's cloud services quarterly revenue rose 14% to $11.70 billion. Its overall revenue of $15.90 billion beat estimates of $15.59 least nine brokerages have raised their price target post-earnings. Oracle trades at a forward price-to-earnings ratio of 25.86, compared to rivals Microsoft at 31.34 and Amazon at 31.80, according to data compiled by LSEG. Microsoft's stock has gained 12.16%, while Amazon's has decreased by 2.8% so far this year. "ORCL has entered an entirely new wave of enterprise popularity that it has not seen since the Internet era in the late 90s," analysts at Piper Sandler added.
