Feb. 16 (UPI) — Seasonally adjusted wholesale prices measured by the Producer Price Index went up 0.3% in January, more than expected, according to a Friday Bureau of Labor Statistics report.
For the 12 months ending in January unadjusted wholesale inflation, or headline PPI, was 0.9%. Producer prices for services drove the increase, while goods prices actually declined 0.2%.
“The index for final demand services moved up 0.6% in January, the largest increase since rising 0.8% in July 2023,” the BLS said in a statement. “In January, most of the advance is attributable to prices for final demand services less trade, transportation, and warehousing, which climbed 0.8%. The index for final demand trade services moved up 0.2%.”
The BLS said a 2.2% hike in hospital outpatient care costs “was a major factor in the January rise in prices for final demand services.”
According to the BLS, most of the January drop in PPI goods prices “is attributable to a 1.7% drop in prices for final demand energy.”
Gasoline prices fell 3.6% while electric power, ethanol and iron and steel scrap prices also moved lower.
Consumer inflation measured by the consumer price index also rose a more than expected 0.3% Tuesday, 3.1% from the same point last year.
Taken together, the PPI and CPI January numbers point to continuing persistent inflation still above the 2% ideal number desired by the Federal Reserve.
That dampens hope for any quick interest rate cuts.
Markets had expected interest rate cuts to start as soon as March, but with the current data that’s been pushed back to June since the Fed is cautious about ending the interest rates effort to cool inflation too soon.
