U.S. wholesale prices fell in April by the largest margin in five years, offering signs that inflation may be cooling even as President Donald Trump’s trade strategy evolves. The producer price index declined 0.5% from March, marking the first monthly drop since October 2023 and catching economists off guard, as they had expected a slight increase.

Compared to April of last year, wholesale prices rose 2.4%, a slowdown from the 3.4% year-over-year gain recorded in March. Core wholesale prices, which exclude food and energy, dropped 0.4% from the prior month and rose 3.1% over the year. The data indicates weaker price pressure at the producer level, a trend that could ease inflation for consumers in the coming months.

The sharpest decline was seen in services, where prices fell 0.7%—the steepest one-month drop since records began in 2009. Retailers and wholesalers reported thinner profit margins, contributing to the decline. Food prices at the wholesale level also fell by 1%, with egg prices down 39%, though still significantly higher than a year ago due to ongoing effects of bird flu.

Consumer price data released earlier in the week also reflected moderation, with prices rising 2.3% year-over-year, the smallest increase in over four years. The trend offers hope that broader inflation may be stabilizing.

President Trump’s tariff policy remains a key variable. Earlier this week, the administration announced a major adjustment to its stance on China, reducing tariffs on Chinese imports from 145% to 30%. China responded by lowering its tariffs on American goods from 125% to 10%. The shift signals an easing in trade tensions with the U.S.’s third-largest import partner.