Producer prices fell unexpectedly in latest data

The Center Square cited CEI’s expert on tariffs and lower consumer demand

Ryan Young, senior economist with the Competitive Enterprise Institute, said in a statement provided to The Center Square that there are competing factors affecting inflation: tariffs and lower consumer demand.

“Tariffs are pushing prices up, and slow demand is pushing prices down,” Young said. “Right now, that downward pressure from slower demand is stronger than expected, at least compared to the upward pressure from tariffs.”

While companies are absorbing some of the increased costs of President Donald Trump’s 10% reciprocal tariffs, they can’t absorb all of them.

“For example, the grocery industry averages a 2% margin,” he said. “That is not nearly enough to absorb a 10% tariff, let alone a 145% tariff. On net, tariffs put upward pressure on prices.”

But lower consumer demand is driving prices lower.

“There was a demand spike before the tariffs hit as companies stockpiled as much as they could,” Young said. “The flipside is slower demand after those tariffs come into effect. That is starting to happen now.”

Read more at The Center Square