Inflation, as measured by the producer price index, declined by three-tenths of a percentage point to 2.3% for the year ending in June, signaling that the U.S. is evading pain from the tariffs imposed by President Donald Trump.

The numbers were released on Wednesday by the Bureau of Labor Statistics and the decline is welcome news for the economy.

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On a month-to-month basis, the wholesale price index was flat.

The report comes a day after the more closely watched consumer price index rose by three tenths of a percentage point to 2.7%, a change suggesting some renewed price pressure as the economy absorbs the tariffs.

Business executives have faced significant uncertainty about how Trump’s sweeping tariff agenda might affect prices. It is also unclear to what degree they will complicate the Federal Reserve’s mission to drive down inflation while keeping the economy and labor market afloat.

Meanwhile, the Fed has been drawn into controversy because the Trump administration has been publicly pushing Fed Chairman Jerome Powell to cut interest rates, despite the central bank fearing that doing so could be too premature and cause inflation to rebound.

The Fed considers 2% to be the healthy level of inflation.

Given the rise in the consumer price index, the most closely watched inflation gauge, it seems unlikely that the Fed will cut interest rates at its next meeting this month, although there are indications that the Fed will cut at least once more this year.

Meanwhile, the labor market is holding on despite the higher interest rate environment.

The economy again beat expectations in June and added 147,000 jobs, an encouraging sign. The unemployment rate fell slightly to 4.2%, the Bureau of Labor Statistics reported.

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Economic growth earlier in the year was also concerning. GDP contracted at an annual rate of 0.5% in the first quarter, further fueling fears of an economic slowdown or a recession.

But since then, GDP growth has likely expanded in the second quarter. The Atlanta Fed’s “GDPNow” tracker predicts GDP growth in the second quarter will grow by a strong 2.6%, according to the latest estimate.