Wholesale prices fell unexpectedly in August, confounding Wall Street forecasts and fueling optimism about the resilience of the U.S. economy under President Donald J. Trump.
The surprise data triggered a rally on Wall Street, pushing the S&P 500 to a new record high on Wednesday.
The Bureau of Labor Statistics reported that the Producer Price Index, a key measure of wholesale inflation, rose just 2.6 percent year over year, well below the 3.3 percent increase economists had projected. On a monthly basis, prices slipped 0.1 percent, defying expectations of a 0.3 percent gain.
“Boy, I’m surprised — real progress here! 2.6% on year-over-year headline. We were expecting 3.3%!” CNBC’s Rick Santelli said on air. His colleague Becky Quick called the report “a real shocker,” underscoring the extent to which analysts had misread the direction of inflation.
The White House, long critical of what it has called inaccurate forecasts and misplaced alarmism from economists, seized on the report as validation of the president’s policies. “The latest PPI report shows there is no inflation — wholesale prices fell and smashed economists’ expectations,” said Karoline Leavitt, the White House press secretary. “President Trump has defeated Joe Biden’s inflation crisis while successfully implementing powerful tariffs, which haven’t hiked prices like the so-called ‘experts’ claimed. This is yet another reason for Jerome ‘Too Late’ Powell to cut the rates immediately to make everyday life more affordable for Americans.”
The statement represented both a celebration of the new data and a sharp rebuke of Federal Reserve Chair Jerome Powell, whom the administration has accused of moving too slowly to ease monetary policy.
Powell signaled last month that a rate cut could be considered under current conditions, and the latest numbers are likely to intensify pressure on the Fed’s Board of Governors as they convene in September.
The strong report marked a reversal from July, when the PPI jumped 0.7 percent month over month, the highest increase since Mr. Trump began his second term in January. The August pullback provided evidence that the spike had been an outlier, rather than a trend.
Financial markets responded immediately. The S&P 500 added 0.4 percent to reach another record high, with technology stocks leading the way. Oracle surged 40 percent after issuing an aggressive forecast that predicted artificial intelligence revenue would climb to $144 billion by 2030.
The broader political implications were equally notable. For months, economists and critics had warned that Mr. Trump’s tariffs on dozens of countries — including major U.S. trading partners — would inevitably drive up costs for consumers. Instead, prices have remained steady, and in some cases have declined, even as the duties remain in force.
The administration has warned that the stakes are high as the tariffs face scrutiny before the Supreme Court. A ruling against them, officials argue, would carry “ruinous” consequences for the U.S. economy. For now, however, the White House is treating the latest inflation report as evidence that its trade and economic strategies are paying off, with the stock market and consumers both reaping the rewards.
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