Producer prices in US rise more than forecast on services

[WASHINGTON] A key measure of US producer prices rose more than forecast in January, suggesting some inflationary pressures may be building.

So-called core producer prices increased 1.7 per cent in January from a year earlier, topping all forecasts in a Bloomberg survey of economists, a Labour Department report showed Wednesday. Including food and energy, the index rose 0.5 per cent from the prior month and 2.1 per cent  from a year ago.

Producer prices excluding food, energy, and trade services - a measure preferred by economists because it strips out the most volatile components - rose 0.4 per cent from the prior month, the most since April, and 1.5 per cent from a year earlier.

In January, 90 per cent of the increase in final demand prices was due to a 0.7 per cent jump in services costs. Those prices reflected a record 10.3 per cent surge in margins at retailers of apparel, jewelry, footwear and accessories. This outweighed record declines in freight and cargo transportation and airline passenger services that may reflect the fallout from the coronavirus.

Goods prices excluding food and fuel advanced 0.3 per cernt, the most in a year, as iron and steel scrap surged the most since January 2017.

The report measures wholesale and other business selling costs and suggests the potential for price pressures at the consumer level.

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