Wholesale inflation surged far faster than projected in February, indicating that pricing pressures in the economy remain considerable and difficult to control.
The Labor Department reported Thursday that its producer price index, which measures inflation at the wholesale level before it reaches consumers, increased by 0.6% in February compared to the previous month. Prices have risen 1.6% year over year, the highest amount since September 2023.
These statistics are both higher than the 0.3% monthly growth and the 1.1% yearly increase expected by LSEG analysts.
Core prices rose by 0.3% during the month, indicating the persistence of high inflation. That is greater than the 0.2% prediction, but it is lower than the 0.5% result from last month.
On a 12-month basis, the figure increased by 2%, remaining steady since January.
High inflation has put tremendous financial strain on most U.S. households, forcing them to pay more for common necessities like food and rent. Low-income Americans bear a disproportionate share of the expense, with price swings having a significant impact on their already squeezed paychecks.
The news comes two days after the Labor Department reported that the more closely watched consumer price index, which measures prices paid directly by consumers, increased 0.4% in February from the previous month and 3.2% from the same time last year, quicker than economists predicted.
Both releases are seen as major inflation indicators, with the PPI seen as a leading indicator of inflationary pressures as expenses are passed on to consumers. The various indicators lead to inflation remaining above the Federal Reserve’s targeted 2% objective.
As officials strive to assess what happens with interest rates in 2024, the Fed has indicated that it is keenly monitoring signs that inflation is continuing to fall.
Central bank officials have hinted that they may lower interest rates this year, but only if they are sure that inflation has been defeated.
