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Tariffs Aren’t Fueling Inflation: June Producer Price Index Shows Zero Growth

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the staff of the Ridgewood blog

WASHINGTON, D.C. — So much for the “tariffs equal runaway inflation” narrative. The latest data from the Bureau of Labor Statistics (BLS) shows that wholesale prices were completely flat in June, suggesting that fears of tariffs causing a major price surge may be more hype than reality.

The Producer Price Index (PPI), which measures the average change in prices domestic producers receive for their goods and services, showed no change for the month, despite economists predicting a modest 0.2% increase. Even the so-called core PPI, which strips out volatile food, energy, and trade services, came in flat.

What the Numbers Really Say

  • PPI in June: 0.0% change (vs. +0.2% expected)

  • Core PPI: 0.0% change (vs. +0.2% expected)

  • 12-month PPI change: +2.3%

  • Core PPI over 12 months: +2.5%

This follows a 0.3% increase in May and a 0.3% decline in April, showing that price movements remain well within historical norms.

Tariffs? Barely a Blip on Prices

For months, critics have argued that tariffs—especially those enacted during the Trump administration—would ignite crippling inflation. Yet here we are, with wholesale prices holding steady even after multiple rounds of tariffs on imports.

Yes, some prices on goods moved slightly higher in June (a 0.3% increase for final demand goods), but that was completely offset by a 0.1% decline in services, leaving overall producer costs unchanged.

In short: tariffs aren’t the inflation time bomb some claim them to be.

Why This Matters for Consumers

The Producer Price Index often leads the Consumer Price Index (CPI) because it reflects the costs businesses face before goods and services reach consumers. If tariffs were truly wreaking havoc on supply chains, we’d expect to see significant, sustained spikes in wholesale costs. Instead, the data suggests that businesses are absorbing or adjusting to tariff-related costs without passing them along in ways that fuel broad inflation.

Combined with Tuesday’s CPI report, which also showed tame consumer inflation, it’s becoming harder to argue that tariffs are causing meaningful price shocks.

The Bigger Picture

For the 12 months ending in June, overall PPI is up just 2.3%, with the “core” measure at 2.5%—hardly the kind of runaway inflation that tariff critics predicted.

Meanwhile, the U.S. economy continues to grow, and trade policy adjustments have not derailed broader price stability.

Key Takeaway

The flat June wholesale price data undermines the narrative that tariffs automatically lead to higher inflation. While tariffs can cause isolated price adjustments, the overall economic impact on consumer and producer prices appears muted at best.

So the next time someone claims tariffs are driving up costs for everyone, the numbers suggest otherwise.

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