The Producer Price Index report showed wholesale inflation measure was unchanged in June. It comes on the heels of the Consumer Price Index showing inflation accelerated in June. CBS News business contributor Javier David joins to break it down.

Washington

The Producer Price Index (PPI) report revealed that wholesale inflation remained flat, showing no change for the month. This comes in contrast to the Consumer Price Index (CPI), which indicated an acceleration in consumer inflation during the same period. According to CBS News business contributor Javier David, the steady PPI suggests that companies are absorbing higher costs rather than passing them on to consumers, though this may not be sustainable in the long term, especially with ongoing tariff uncertainties.

David explained that while some companies are managing costs through stockpiling and accepting lower profit margins, the effects of inflation can be delayed due to complex supply chains and consumer substitution behaviors. He also noted that markets have become less reactive to new tariff threats, viewing them more as bargaining tools than immediate economic risks.

What a steady wholesale inflation rate says

back a newly released data shows a surprisingly tame inflation report. We're talking about the producer price index. That report shows no change in the month of June. Now, new data just released also tells us more about what we expect in today's expectation. Obviously, we're seeing that statement there from the White House. It says that it beat the expectation, beating the wholesale prices and it stayed flat in June and is yet more proof that the Trump administration has swiftly tamed Joe Biden's inflation crisis. Let's get to CBS News business contributor Javier David. He's also the business editor at the Dallas Morning News. Javier, thank you so much for joining us today. Now, after the latest consumer price index report, it shows inflation accelerated last month, but talk to us about the difference between consumer price index and producer price index. Yeah, PBI is best represented as wholesale inflation, i.e. that's what companies and manufacturers are paying to produce what we all consume. Consumer prices, of course, are what individuals pay at the various points of sale in the economy. Today's mild reading really suggests that companies are shying away from passing along a lot of the costs that they're absorbing to consumers, even as tariffs create this widespread uncertainty about the trajectory of inflation. There are various ways that companies are accomplishing this. They're stockpiling goods in the domestic market. They're just eating these higher costs, which tend to eat into their profit margin. So those moderating effects just aren't guaranteed to last forever. And so that's one of the reasons why it's really necessary to get some clarity on tariffs, because they're not going to be able to hold the line forever. But I suppose the question is, because we have talked about, oh, tariffs, it's going to make things really, really difficult for consumers and make things more expensive. But month after month, sometimes we see that people are feeling the effect of it. Other times we feel like they're not. When exactly can we say, okay, consumers are really starting to feel the impact of rising costs? Yeah, look, inflation operates on a lag. And we have a really complicated, complex, sprawling global supply chain. So there are ways in which I just mentioned, companies are blunting the impact. Another big thing that is happening is consumers are substituting. There's a substitution effect going on. So something that costs more, and I see it, and I'm like, oh, I'm not paying that. I'm going to go buy this other cheap thing. That's a big part of what's holding or making it at least tolerable. So inflation on the lag, a supply chain that allows wholesalers and companies and manufacturers to sort of move things around and stockpile so that things are less costly to the consumer. But it's also, you know, it's being felt. In a lot of ways, consumers do feel it. And we sort of downplay that effect, but it really is already here. And it's just, it makes the Fed in particular nervous about cutting rates because they know how unpredictable inflation can be. And, you know, it's not always, it's not a given that companies are going to be able to hold the line and consumers are just going to continue to eat these higher costs. Yeah. Okay. So what is on your radar ahead of this tariff deadline on August 1st? How do you expect investors to respond to it? Yeah, it's the market's reaction has been very curious. Interestingly, you know, the Trump administration threatened again, new tariffs against Indonesia today. Bloomberg had a really good summary today that points out that the market's reaction really does kind of suggest that investors are inuring themselves on most of these levies and that it's something that once was seen as like very punitive. It's tolerable. Markets aren't throwing fits anymore. We really are seeing volatility indexes at multi-month, if not multi-year lows, we're having shallow selloffs. One investor just told me last week, people really see the tariffs as a bargaining chip. They almost don't take it seriously. It's a real risk. It certainly is. Javier David, thank you so much for joining us on 24 seven today. As always, we appreciate your insight.

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