(Feb 27): Prices paid to US producers rose in January by more than forecast, fuelled by services and pointing to lingering inflationary pressures.
The producer price index (PPI) increased 0.5%, the most since September, after a revised 0.4% increase in December, a Bureau of Labor Statistics report showed Friday. An underlying gauge that excludes food and energy advanced by the most since July.
Consecutive months of firm wholesale-price readings add to evidence of slow progress toward beating inflation. Higher duties on imported materials have encouraged many producers to raise prices or find other cost savings to protect margins. Excluding food and energy, the January increase in goods prices was among the largest since early 2022.
Stocks futures fell further after the report while Treasury yields pared losses.
Economists and investors closely track the PPI because several of its components feed into the Fed’s preferred inflation gauge, the personal consumption expenditures price index.
See also: US jobless claims edged higher to 212,000 in holiday week
Among those inputs used to compile the PCE price index, portfolio management costs, airfares and physician care costs rose firmly. The Bureau of Economic Analysis is scheduled to release January PCE price data, along with income and spending figures, on March 13.
And while tariffs have put some upward pressure on consumer prices, companies largely haven’t hiked prices as much as economists once feared. Data out earlier this month showed a key gauge of inflation was fairly mild in January, defying concerns of a bigger jump.
With only gradual progress in bringing inflation down to the Fed’s 2% target, as well as recent signs of stabilisation in the labour market, central bankers have little urgency to reduce interest rates after three straight cuts at the end of last year.
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