Economists were expecting monthly prices to rise in April by 0.2% and to slow to 2.4% on an annual basis, according to FactSet. A driving force behind the downward monthly swing was a 1.7% plunge in trade services, a category that measures gross margins for wholesalers and retailers. Although it’s a volatile category, the sharp downward swing in trade services indicates that companies’ margins are being eaten away by higher costs from President Donald Trump’s tariffs, Joe Brusuelas, chief economist at RSM US, told CNN on Thursday. “We are beginning to see the impact of trade policy filtering into the hard data in such a way that it’s impossible to deny that it is now affecting revenues and profit margins for firms,” Brusuelas said.

Wholesale prices took their largest month-to-month dive in April since the height of the coronavirus pandemic amid President Trump’s ongoing trade war. The producer price index (PPI), a measure of wholesale inflation, declined 0.5 percent from March to April, the largest monthly drop since April 2020 immediately following the onset of the pandemic when the global economy started a series of shutdowns. On an annual basis, the PPI rose in April by 2.4 percent, the lowest level since September of last year, the Labor Department reported Thursday. Removing the more volatile categories of food and energy, the PPI declined 0.1 percent to mark an annual increase of 2.9 percent. Economists noted profit margin contraction associated with the price level decline.

U.S. wholesale prices dropped unexpectedly in April for the first time in more than a year despite President Donald Trump’s sweeping taxes on imports. The producer price index — which tracks inflation before it hits consumers — fell 0.5% last month from March and rose 2.4% from April 2024, the U.S. Labor Department reported Thursday. Excluding volatile food and energy prices, so-called core wholesale prices dipped 0.4% from March and rose 3.1% from a year earlier.