US producer prices unexpectedly fell 0.5% in April, the largest drop in five years, primarily due to shrinking profit margins. This suggests companies are absorbing costs from higher tariffs rather than passing them to consumers.
Many businesses report being unable to fully pass on increased costs, with fewer than one in five firms saying they could transfer a 10% cost increase to customers.
While some automakers are offering discounts or freezing prices, retailers like Walmart warn that price increases are coming soon due to tariffs and economic uncertainty.