Three major economic reports were released this week: the consumer price index, the producer price index, and U.S. retail sales. 

Consumer price index (or the inflation rate) increased 3.8% year-over-year and has unwound the progress made so far by the Trump administration on inflation. I covered this here.

Producers are increasingly squeezed by inflation

The producer price index tells a different side of the same story. While consumers feel the increase in final goods and retail prices, the producer price index shows how much inflationary pressure is hitting the supply chain and intermediate goods that have not yet reached the final stage of production. U.S. retail sales provide another look at how consumers are reacting to higher prices and economic changes. 

The producer price index increased 1.4% since March and 6.0% over the last 12 months. For reference, 6.0% is the largest year-over-year increase since December 2022, and 1.4% is the largest month-over-month increase since March 2022. 

This signals significant pressure in the supply chain for goods and services as producers are paying higher prices to manufacture and deliver goods. Prices for producer goods increased 2.0% in April, and more than three-quarters of this increase is due to a 7.8% increase in energy prices. 

While the conflict in Iran has already impacted consumers, it is further impacting the supply chain that relies on energy to produce final products. 

Consumers are still buying

U.S. retail and food services sales increased 0.5% in April from March. From April 2025, sales increased 4.9%. This is the third month in a row that retail sales have increased, even with rising inflation. Although April’s increase was lower than it was in March (1.6%), a three-month stretch of increased sales in the face of rising gas and food prices signals a resilient consumer base 

These three economic indicators allow us to see a more full picture of the U.S. economy through times of struggle rather than a one-sided look at inflation. As prices continue to rise, the expectation is that Americans will react by cutting back on spending and trying to save more money in order to cover necessary expenses. However, this reaction has not yet happened. There may be a lagged reaction as April inflation spreads and catches up to consumers, but the U.S. economy remains strong in the face of rising producer and consumer prices.

Part of the protection against rising inflation is the implementation of the Working Families Tax Cuts. While taxes were due in April, many families received larger tax refunds. The average tax refund rose 11% in 2026 to $3,400. With further tax savings, Americans are more insulated against sharp rises in price.

Bottom Line

Despite rising prices for both consumers and producers, U.S. retail sales show that the U.S. consumer is resilient. Inflation rising in the final goods sector and the producer goods sector signals producers are also paying more in order to bring goods to market. However, consumers have still been willing to pay inflated prices to an extent. With only a slight dip in U.S. retail sales compared to last month, inflation has not hit consumers as hard as it has in the past.