The Trump administration is facing its latest dismal economic news: wholesale inflation is at the highest level since 2022 under President Joe Biden.
The Labor Department reported Wednesday that the producer price index — those charged by producers to wholesalers and retailers — rose 1.4 percent in April, doubling from March, and marking the largest monthly gain since March 2022.
Producer prices shot up 6 per cent from a year earlier, and the most since December 2022 as President Donald Trump’s Iran war causes energy prices to rise and puts pressure on companies to pass along higher costs along to consumers.
Excluding energy and food costs, “core” producer prices ticked up 1 percent from March – significantly higher than the previous month’s gain of 0.2 percent. Year-over-year, core prices crept up 5.2 percent, according to the report.
Almost 60 percent of the increase in wholesale inflation was attributed to the rise in final demand prices, which are received by domestic producers for goods, services and construction to be sold for final consumption.
“Over 40 percent of the April advance in prices for final demand goods can be attributed to a 15.6-percent increase in the index for gasoline,” the Labor Department wrote.
“Prices for jet fuel, diesel fuel, fresh and dry vegetables, industrial chemicals, and residual fuels also rose.”
The reading came in well above expectations after economists surveyed by The Wall Street Journal forecast a 0.5 percent rise. Experts view wholesale inflation as an early indicator of where consumer inflation — the rate at which the cost of goods and services changes over time — may be heading.
On Tuesday, the Labor Department announced that the consumer price index leapt 3.8 percent year-over-year in April, the biggest annual increase in over three years.
The shift was largely fueled by surging energy prices tied to the U.S.-Israel war with Iran. U.S. and Iranian blockades in the Strait of Hormuz have choked the global oil supply.
On Wednesday, the average price for a gallon of gas in the United States was $4.51, up from $2.98 two days before the conflict began February 28, according to AAA.
“If the Strait doesn’t re-open soon, I believe we could see the national average price of gasoline reaching $5/gal as early as sometime in June,” Patrick De Haan, head of petroleum analysis at GasBuddy, said Tuesday.
President Donald Trump and the Republican Party are facing mounting pressure over the U.S. economy as the midterms approach in November. In a YouGov survey from May 3, 61 percent of respondents said the U.S. economy is getting worse — the largest share since 2022.
A CNN poll this week also found that about three in four Americans believe Trump’s policies have driven the cost of living up, with most people blaming his decision to go to war with Iran and his sweeping tariff regime as driving factors. In the poll, the president’s approval rating on the economy hit a new low, with 7 in 10 respondents fearing a recession in the next year.
Still, Trump appears largely unfazed by growing signs that many Americans are feeling financially strained. Before departing for China Tuesday, the president was asked by reporters whether “Americans’ financial situations” were driving him to make a deal with Iran.
“Not even a little bit,” Trump responded. “The only thing that matters when I’m talking about Iran — they can’t have a nuclear weapon. I don’t think about Americans’ financial situation. I don’t think about anybody. I think about one thing — we cannot let Iran have a nuclear weapon. That’s all.”
The White House has pushed back against claims that the economy is in dire straits, asserting last week that experts “keep getting it wrong” and that “the American economy remains on a solid trajectory.” The administration pointed to the latest employment figures, which showed 115,000 jobs were added in April.
Other Republicans, though, have taken a less sanguine tone, with some anticipating a midterm shellacking should current conditions persist.
“Everybody is pretty realistic about the fact that holding the House is going to be extremely difficult,” an unnamed source close to the White House told Politico earlier this month. “Every day the war goes on, every day gas prices hover around five bucks, it makes it less and less likely, and it’s already very unlikely.”
At the same time, Democrats have repeatedly hammered the administration on the economy — as recent polling indicates voters now trust Republicans less on pocketbook issues than Democrats for the first time in years.
“Americans are demanding help with the cost-of-living crisis, but President Trump would rather start another war, potentially driving up energy prices, than listen to them,” Connecticut Rep. Rosa DeLauro said earlier this year.
