Inflation at the wholesale level rose much more than expected in February, the latest sign that price pressures within the economy remain elevated and difficult to tame.
The Labor Department said Thursday that its producer price index, which measures inflation at the wholesale level before it reaches consumers, surged 0.6% in February from the previous month. On an annual basis, prices remain up 1.6% — the highest level since September 2023.
Those figures are both higher than the 0.3% monthly gain and the 1.1% annual figure predicted by LSEG economists.
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In another sign that points to the stickiness of high inflation, core prices — which exclude the more volatile measurements of food and energy — jumped 0.3% for the month. That is higher than the 0.2% estimate, although it is below the 0.5% reading recorded last month.
The figure was up 2% on a 12-month basis, unchanged from January.
WHY ARE GROCERIES STILL SO EXPENSIVE?
High inflation has created severe financial pressures for most U.S. households, which are forced to pay more for everyday necessities like food and rent. The burden is disproportionately borne by low-income Americans, whose already-stretched paychecks are heavily affected by price fluctuations.
The data comes two days after the Labor Department said the more closely watched consumer price index, which measures the prices paid directly by consumers, rose 0.4% in February from the previous month and 3.2% from the same time last year, faster than economists anticipated.
Both releases are considered to be important measurements of inflation, with the PPI believed to be a leading indicator of inflationary pressures as costs work their way down to consumers. The different gauges point to inflation that is still running above the Federal Reserve’s preferred 2% target.
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The Fed has signaled it is closely watching for evidence inflation is continuing to subside as policymakers try to determine what comes next for interest rates in 2024.
Central bank officials have opened the door to cutting interest rates this year, but indicated they will not do so until they are confident that inflation is conquered.
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