US producer prices rise more than forecast in February
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The news: US producer prices rose more sharply than expected in February, before the war in Iran began bearing an impact on energy prices and consumer sentiment.
The numbers: The Bureau of Labor Statistics’ producer price index, which tracks the change in wholesale prices, rose 0.7% in February, above the 0.3% that economists polled by Dow Jones had estimated.
Core PPI, a gauge which strips out volatile food and energy costs, increased 0.5% in February.
The all items index saw prices rise faster than the 0.5% pace notched in January, the core reading came in less than the 0.8% reached in January.
The context: A 0.5% increase in services costs was a key driver in the PPI’s sharp uptick, while goods prices rose 1.1% on the month, food prices rose 2.4% and energy was up 2.3%.
On a 12-month basis, headline PPI inflation was at 3.4%, while core PPI was at 3.9%. The Federal Reserve, which is due to deliver its rate decision later on Wednesday, targets inflation at 2%.
Federal Reserve policymakers, who are expected to keep interest rates unchanged, will turn their focus toward supply shock brought about by the war in Iran, as a spike in oil prices add to inflationary pressures.
The source: Bureau of Labor Statistics
