January wholesale inflation saw biggest monthly increase since August
New York (CNN) — Wholesale inflation, as measured by the Producer Price Index, rose more than expected in January, adding to what has so far been a disappointing inflation picture for the month.
Posted — UpdatedThe Producer Price Index rose 0.3% last month, resulting in an annual increase of 0.9%, according to Bureau of Labor Statistics data released Friday.
Price hikes among services providers drove the overall uptick in January, rising 0.6% for the month. Some of the biggest increases were in hospital care and traveler accommodation.
Despite coming in hotter than economists had expected (a projected 0.1% monthly increase and a 0.7% annual gain, according to FactSet), the annual increase is in line with what was seen during the last quarter of 2023 and remains at the third-lowest rate notched since the pandemic’s upheaval of supply chains.
However, the monthly increase of 0.3% was the highest since August 2023, BLS data shows.
PPI captures average price shifts before they reach consumers and serves as a potential signal for the prices consumers ultimately end up paying.
“Inflation is back, not in a big way, but it is also true that it is not going away and could yet wreak havoc on the broader economy where higher factory prices increase inflation at the consumer level,” economist Chris Rupkey, of FwdBonds, wrote Friday.
When stripping out the food and energy categories, which tend to be more volatile, core PPI jumped 0.5% for the month, bringing the yearly increase to 2%, an acceleration from December’s 1.7% gain.
Economists had expected core PPI to rise 0.2% for the month and 1.8% annually, according to FactSet consensus estimates.
The warmer-than-expected PPI data caps off a week that saw the latest Consumer Price Index not slowing as much as economists would have thought.
The January CPI showed that retail-level prices rose by 3.1% annually. While that marked a step back from December’s 3.4% rate and a dramatic cooling from the 6.4% increase seen in January 2023, the index didn’t cool to the 2.9% level economists were projecting. The disappointing reading sent the Dow tumbling more than 500 points on Tuesday.
This story is developing and will be updated.
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