Wholesale inflation cools in May to lowest level in two years

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2 years ago

June 14, 2023

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close video Fed is willing to go pretty far to tame inflation: Thomas Hoenig

Former Kansas City Federal Reserve Bank President and CEO Thomas Hoenig joined Mornings with Maria to discuss the Federal Reserves forthcoming rate hike decision.

Inflation at the wholesale level fell more than expected in May, the latest sign that painfully high consumer prices are beginning to loosen their stranglehold on the U.S. economy in the face of higher interest rates.

The Labor Department said Wednesday that its producer price index, which measures inflation at the wholesale level before it reaches consumers, tumbled 0.3% in May from the previous month. On an annual basis, prices are up 1.1% – the lowest rate since December 2020.

Those figures are both lower than the 1.5% headline figure and 0.1% monthly decline forecast by Refinitiv economists.

There are still signs of inflationary pressures in the economy, however.

THE HOUSING RECESSION ISN'T OVER YET

Excluding the more volatile measurements of food and energy, so-called core inflation is still running far hotter than the pre-pandemic average. Core prices are up 2.8% from the same time last year, although they were flat in the period from April to May.

And the services index climbed 0.2% in May following a 0.3% gain the previous month, the Labor Department said in the report. Most of that increase can be traced to a 1% rise in prices for trade services, which measures the changes in margins received by wholesalers and retailers.

INFLATION BREAKDOWN: HIGH RENT, FOOD PRICES REMAIN UNCOMFORTABLY HIGH IN MAY

The data comes a day after the Labor Department reported that the consumer price index, which measures the prices paid directly by consumers, rose just 0.1% in May. The annual inflation rate came in slightly lower than expected at 4% – the slowest pace since March 2021.

Both releases are considered to be important measurements of inflation, with the PPI believed to be a leading indicator of inflationary pressures as costs work their way down to consumers. The different gauges point to inflation that is rapidly declining, although the CPI is still running well above the Fed's preferred 2% target.

Prices are displayed in a grocery store in New York City on Feb. 1, 2023. (Leonardo Munoz/VIEWpress / Getty Images)

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The Federal Reserve has raised interest rates 10 straight times over the past 15 months in a bid to crush out-of-control inflation.

The slowdown in inflation likely gives policymakers additional fodder to forgo another interest rate increase at the conclusion of their two-day meeting on Wednesday. An overwhelming percentage of traders – more than 90% – now anticipate the Fed will pause the tightening cycle, a notable shift from the beginning of the week, according to the CME Group's FedWatch tool.

Technology

How quantum could supercharge Google’s AI ambitions

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2 hours ago

April 18, 2025

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How quantum could supercharge Google’s AI ambitions

Inside a secretive set of buildings in Santa Barbara, California, scientists at Alphabet are working on one of the company’s most ambitious bets yet. They’re attempting to develop the world’s most advanced quantum computers.

“In the future, quantum and AI, they could really complement each other back and forth,” said Julian Kelly, director of hardware at Google Quantum AI.

Google has been viewed by many as late to the generative AI boom, because OpenAI broke into the mainstream first with ChatGPT in late 2022.

Late last year, Google made clear that it wouldn’t be caught on the backfoot again. The company unveiled a breakthrough quantum computing chip called Willow, which it says can solve a benchmark problem unimaginably faster than what’s possible with a classical computer, and demonstrated that adding more quantum bits to the chip reduced errors exponentially.

“That’s a milestone for the field,” said John Preskill, director of the Caltech Institute for Quantum Information and Matter. “We’ve been wanting to see that for quite a while.”

Willow may now give Google a chance to take the lead in the next technological era. It also could be a way to turn research into a commercial opportunity, especially as AI hits a data wall. Leading AI models are running out of high-quality data to train on after already scraping much of the data on the internet.

“One of the potential applications that you can think of for a quantum computer is generating new and novel data,” said Kelly.

He uses the example of AlphaFold, an AI model developed by Google DeepMind that helps scientists study protein structures. Its creators won the 2024 Nobel Prize in Chemistry.

“[AlphaFold] trains on data that’s informed by quantum mechanics, but that’s actually not that common,” said Kelly. “So a thing that a quantum computer could do is generate data that AI could then be trained on in order to give it a little more information about how quantum mechanics works.”

Kelly has said that he believes Google is only about five years away from a breakout, practical application that can only be solved on a quantum computer. But for Google to win the next big platform shift, it would have to turn a breakthrough into a business.

Watch the video to learn more.

Environment

Tesla (TSLA) brand damage is destroying used car value: ‘People don’t want them anymore’

Published

3 hours ago

April 18, 2025

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Tesla’s brand damage is eroding the value of used Tesla vehicles at a rapid rate, as owners rush to sell theirs.

It is breaking the used Tesla market as prices are plunging just as the broader used car market is recovering.

After a few tough years for the used car market following the pandemic, it is finally starting to recover over the last month.

Economic uncertainty and a fear of higher inflation due to Trump’s tariffs are prompting some buyers to shift from the new car market to the used car market.

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From March 2024 to March 2025, average used car prices decreased by 2.68% in the US, but the trend has finally reversed.

According to Car Guru‘s used car index, used car prices have risen an impressive 2.17% in the last 30 days alone.

However, there’s an exception: Tesla.

The price of used Tesla vehicles has been falling, like the rest of the used car market, since the pandemic; however, it is not benefiting from the reversal in the current macroeconomic situation.

While average used car prices rose more than 2% in the last 30 days, Tesla’s used car prices decreased by 1.34% in the US.

That’s due to oversupply, as many Tesla owners are selling their vehicles to distance themselves from the Tesla brand, which is associated with CEO Elon Musk and his increasingly divisive political views.

The demand to sell used Tesla vehicles is so high that many used car dealers, who had been fighting to acquire inventory just a year prior, are starting to be reticent about buying Tesla vehicles as the value decreases so rapidly.

In Quebec, Le Journal de Montréal spoke with local used car dealers and attended a car auction where many Tesla vehicles were up for sale, with some selling for half the price they were selling for just over a year ago.

Éric Piuze, owner of a used car dealership on Montreal’s South Shore, said (translated from French):

“People don’t want them anymore. The Elon Musk effect is very real in Quebec.”

The used car dealers at the auction noted that they are not confident they can sell the used Tesla quickly enough to avoid further value decreases.

Furthermore, they note that potential buyers are lowballing on Tesla vehicles because they are aware that inventory is high, creating a buyer’s market.

Dealers are also seeing higher defaults on Tesla car payments, as buyers who took on debt to purchase them just a few years ago struggle to make payments.

Piuze added (translated from French):

People paid a lot of money for Teslas. During the pandemic, we saw many people remortgaging their homes to buy a Tesla. Those days are over.

At its peak, the average used Tesla price was over $60,000 in 2022. Now, the same vehicles are worth a fraction, but their car payments are still high.

Electrek’s Take

Even with the used car market finally getting a breather from crashing prices, Tesla vehicles are not benefiting at all. This highlights a significant issue in the used Tesla market. It’s broken.

The market can’t absorb the surge in people selling their Tesla vehicles.

I wouldn’t want to be a company holding a fleet of Tesla vehicles right now. The value erosion is impressive.

I thought that maybe the Cybertruck was dragging the entire Tesla market down, with a 6.64% decrease in used value over the last 30 days. However, the Model Y alone saw a 1.67% decrease during the same period.

The good news is that the vast majority of people selling their used Tesla vehicles are purchasing other electric vehicles, thereby boosting the EV market. It’s also giving people the chance to get into Tesla vehicles for cheaper, although they should expect the value of those vehicles to decrease rapidly.

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Technology

Nintendo Switch 2 retail preorder to begin April 24 following tariff delays

Published

3 hours ago

April 18, 2025

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Nintendo Switch 2 retail preorder to begin April 24 following tariff delays

An attendee wearing a Super Mario costume uses a Nintendo Switch 2 game console while playing a video game during the Nintendo Switch 2 Experience at the ExCeL London international exhibition and convention centre in London, Britain, April 11, 2025.

Isabel Infantes | Reuters

Nintendo on Friday announced that retail preorder for its Nintendo Switch 2 gaming system will begin on April 24 starting at $449.99.

Preorders for the hotly anticipated console were initially slated for April 9, but Nintendo delayed the date to assess the impact of the far-reaching, aggressive “reciprocal” tariffs that President Donald Trump announced earlier this month.

Most electronics companies, including Nintendo, manufacture their products in Asia. Nintendo’s Switch 1 consoles were made in China and Vietnam, Reuters reported in 2019. Trump has imposed a 145% tariff rate on China and a 10% rate on Vietnam. The latter is down from 46%, after he instituted a 90-day pause to allow for negotiations.

Nintendo said Friday that the Switch 2 will cost $449.99 in the U.S., which is the same price the company first announced on April 2.

“We apologize for the retail pre-order delay, and hope this reduces some of the uncertainty our consumers may be experiencing,” Nintendo said in a statement. “We thank our customers for their patience, and we share their excitement to experience Nintendo Switch 2 starting June 5, 2025.”

The Nintendo Switch 2 and “Mario Kart World“ bundle will cost $499.99, the digital version “Mario Kart World” will cost $79.99 and the digital version of “Donkey Kong Bananza” will cost $69.99, Nintendo said. All of those prices remain unchanged from the company’s initial announcement.

However, accessories for the Nintendo Switch 2 will “experience price adjustments,” the company said, and other future changes in costs are possible for “any Nintendo product.”

It will cost gamers $10 more to by the dock set, $1 more to buy the controller strap and $5 more to buy most other accessories, for instance.

WATCH: Nintendo has ‘a lot of work to do’ to convince casual users to upgrade to Switch 2: Kantan Games