Wholesale prices took their largest month-to-month dive in April since the height of the coronavirus pandemic amid 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.

“Over two-thirds of the decrease [was] due to shrinkage in margins for final demand trade services, which dropped 1.6 percent,” Nationwide economist Kathy Bostjancic said in an analysis. “At the product level over 40 percent of the decline came from reduced margins for machinery and vehicle wholesaling, which dropped 6.1 percent.”

The numbers follow recent declines in retail inflation. The consumer price index (CPI) dropped to a 2.3-percent annual increase in April from 2.4 percent in March, off a recent high of a 3-percent increase hit in January.

Companies have been saying that Trump’s trade war will result in higher inflation but so far those higher prices have yet to materialize. 

Retail giant Walmart said Thursday it will raise its prices this summer in response to higher costs resulting from President Trump’s trade war.

“The magnitude and speed at which these prices are coming to us is somewhat unprecedented in history,” John David Rainey, Walmart’s chief financial officer, said to The Wall Street Journal.

Economists on Thursday noted the recent downward trend in prices.

“Today’s wholesale inflation numbers and earlier consumer inflation figures suggest inflation continues to cool,” Elizabeth Renter, senior economist at Nerd Wallet, wrote in an analysis.

Raymond James chief economist Eugenio Aleman said Thursday’s CPI number was a “positive surprise.”

“While today’s report delivered a positive surprise, we anticipate continued volatility in inflation data,” he wrote in a commentary.

Federal Reserve Chair Jerome Powell said Thursday that the economy could be in for a period of more frequent supply shocks with increased staying power.

“We may be entering a period of more frequent, and potentially more persistent supply shocks, a difficult challenge for the economy and for central banks,” Powell said at a conference Thursday.

U.S. retail sales clocked a marked slowdown in April in line with economists’ expectation, falling to a 0.1-percent increase from 1.7 percent in March.

“Retail sales were pretty good, despite the pull forward last month,” investment company Global X’s head of strategy Scott Helfstein said.

Looking ahead, economists expect more pullback in spending from consumers.

“Going forward, we anticipate further weakness in consumer spending as pay back from the front-loading of consumption ahead of the tariffs,” Nationwide’s Kathy Bostjancic said.

Consumer and business sentiment has tanked in many recent surveys during Trump’s trade war, but adverse price data has yet to show up in force, economists say.

“Recall that while US sentiment surveys have seen a sharp weakening over the past few months, hard data have so far held up quite well,” Peter Sidorov and others wrote in a Thursday analysis for Deutsche Bank.