Trump’s war in Iran is now bleeding through the wholesale pipeline. April’s Producer Price Index (PPI) report shows wholesale prices rose 6% over the past year, the largest annual increase since December 2022, with core wholesale inflation at 4.4%. Despite the grim report, Trump said this week that he “[doesn’t] think about Americans’ financial situation,” and it’s clear. The president could not be more out of step with Americans. For working families struggling with high prices, their financial situation is top of mind.
The PPI reading comes just one day after the April CPI report revealed that consumers faced the sharpest inflation in nearly three years, and shows inflation pressures are still building. Rising diesel and jet fuel prices are increasing transportation-related costs. These upstream price increases indicate that families will face additional price hikes at the grocery store and across other everyday expenses in the months ahead.
Groundwork’s Executive Director, Lindsay Owens, shared her reaction to the news:
“Trump’s war in Iran has driven prices through the roof and today’s reading shows there is no end in sight. Inflation has now eaten through a year’s worth of wage gains, painting a brutal picture for working families’ budgets heading into summer. Rather than focus on making life more affordable for Americans, Trump is spending time – and taxpayer funds – on his billion dollar ballroom.”
BACKGROUND
- Wholesale inflation is running hot, signaling higher prices for consumers in the months ahead.
- Final demand producer prices climbed 6% over the past year, the largest annual increase in three years, and 1.4% in April alone, while core wholesale prices (less foods, energy, and trade services) rose 4.4% over the past year and 0.6% in April alone. Wholesale inflation typically runs ahead of consumer prices, so today’s print suggests 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 feeding into wholesale prices.
- Final demand energy prices surged 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 is up 4.9% in April and 27.3 percent over the past year.
- The energy shock is increasing wholesale transportation prices: transportation and warehousing is up 5% in April, which includes truck transportation of freight, rising 8.1%, and air transportation of freight, increasing 3.6%. These wholesaler price hikes will feed into price hikes for consumers in the months ahead.
- Trump’s war in Iran is layered on top of his tariffs that continue to raise wholesale prices for tariff-exposed goods.
- Wholesale final demand goods (less food and energy) climbed 4.6% over the past year and 0.7% in April alone.
- Wholesale prices for tariff-exposed goods continued rising, including metals up 35.6% in the past year, electronic components up 27.6%, and communication equipment up 11.9%.
This content originally appeared on Common Dreams and was authored by Newswire Editor.