Trump’s war in Iran is now bleeding through wholesale pipelines. The April Producer Price Index (PPI) report shows that wholesale prices rose 6% over the past year, the largest annual increase since December 2022, with core wholesale inflation reaching 4.4%. Despite the horrific report, Trump said this week that “[doesn’t] “Think about the financial situation of Americans,” that much is clear. The president could not be more distant from Americans. For working families suffering from rising prices, their financial situation is their most important priority.
The PPI reading comes just one day after the April CPI report revealed that consumers faced the largest inflation in nearly three years, and shows that inflation pressures are still building. Rising diesel and jet fuel prices increase costs associated with transportation. These initial price increases indicate that families will face additional price increases at the grocery store and across other daily expenses in the coming months.
Groundwork CEO Lindsey Owens shared her reaction to the news:
“Trump’s war in Iran has sent prices soaring, and today’s reading shows there is no end in sight. Inflation has now eaten away a year’s worth of wage gains, painting a brutal picture for working families’ budgets heading into summer. Instead of focusing on making life more affordable for Americans, Trump is spending time — and taxpayer money — in his billion-dollar hall.”
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- Wholesale inflation is increasing, indicating higher prices for consumers in the coming months.
- Final demand producer prices rose 6% over the past year, the largest annual increase in three years, and 1.4% in April alone, while core wholesale prices (excluding food, energy and business services) rose 4.4% over the past year and 0.6% in April alone. Wholesale inflation typically leads consumer prices, so today’s edition suggests that further price increases are on the horizon for consumers.
- Trump’s war in Iran has closed the Strait of Hormuz for more than two months, and the resulting energy shock is fueling wholesale prices.
- Final energy demand prices rose 7.8% in April alone, with wholesale gasoline up 15.6% in the month and 39.3% over the past year, diesel fuel up 12.6% in April and 73.8% over the past year, jet fuel up 36.4% in April and 103.8% over the past year, and natural gas up 4.9% in April and 27.3% over the past year.
- The energy shock is increasing wholesale transportation prices: Transportation and warehousing rose 5% in April, which includes trucking of goods, which rose 8.1%, and air transportation of goods, which increased 3.6%. These price hikes for wholesalers will lead to higher prices for consumers in the coming months.
- Trump’s war in Iran is on top of tariffs that continue to raise wholesale prices for goods subject to tariffs.
- Wholesale final demand goods (excluding food and energy) rose 4.6% over the past year and 0.7% in April alone.
- Wholesale prices for goods subject to tariffs continued to rise, including metals, which rose 35.6% last year, electronic components, which rose 27.6%, and communications equipment, which rose 11.9%.
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