US wholesale inflation exceeds forecast on higher food, energy
The producer price index for final demand rose 0.4% from a month earlier, after an upwardly revised 0.5% increase in December
US WHOLESALE prices picked up in January on higher food and energy costs, highlighting only limited progress on inflation ahead of tariffs imposed by the Trump administration.
The producer price index for final demand rose 0.4 per cent from a month earlier, following an upwardly revised 0.5 per cent increase in December, according to a Bureau of Labor Statistics report released on Thursday (Feb 13). The median forecast in a Bloomberg survey of economists called for a 0.3 per cent gain in January. Compared with a year ago, the PPI increased 3.5 per cent.
Excluding food and energy, the PPI climbed 0.3 per cent, and 3.6 per cent from January of last year.
The data on wholesale prices follow a surprising consumer price index report on Wednesday that showed underlying inflation at the start of the year was the highest since March. The figures have sharply reduced odds that Federal Reserve policymakers will lower interest rates more than once in 2025, with some economists expecting no rate cuts due to the fallout from higher duties on imported goods.
Fed Chair Jerome Powell told lawmakers this week that inflation expectations “appear to remain well-anchored” and central bankers have scope to be patient with rate adjustments. Still, President Donald Trump’s policy proposals, including tariffs, have introduced some uncertainty to the economic outlook.
Economists pay close attention to the PPI report because several of its components feed into the Fed’s preferred inflation measure – the personal consumption expenditures price index.
Those categories were more favourable in January, including declines in most health care items and airfares. Portfolio management services costs rose for a second month. BLOOMBERG
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