Wholesale prices rose faster than expected in February, another reminder that inflation remains a thorny issue for the U.S. economy.
this producer price indexThe U.S. Department of Labor’s Bureau of Labor Statistics reported Thursday that an index measuring pipeline costs for raw materials, intermediate goods and finished goods rose 0.6% for the month. That was higher than the Dow Jones forecast of 0.3% and followed a 0.3% gain in January.
Excluding food and energy, core PPI rose 0.3%, compared with expectations for a 0.2% rise. Another indicator excluding trade services rose 0.4%, compared with January’s 0.6% increase and above expectations for a 0.2% gain.
Compared with the same period last year, the overall index rose 1.6%, which was the largest increase since September 2023.
The data led to losses on Wall Street, with major U.S. stock markets falling slightly. Treasury yields climbed after the report was released.
The morning’s busy economic data also showed that retail sales rebounded, rising 0.6% monthly, according to Commerce Department data (seasonally adjusted but not taking into account inflation). The growth helped reverse a downward revision from January’s 1.1% decline, but was still below expectations for 0.8% growth.
also, Applying for Unemployment Insurance for the First Time The unemployment rate edged down last week to 209,000, a decrease of 1,000 and below expectations of 218,000, according to the Labor Department report. The number of people continuing to claim unemployment benefits rose slightly to 1.81 million, but last week’s data was revised down sharply.
Market focus was on the release of the Producer Price Index (PPI), which came two days after the release of the Consumer Price Index (CPI), which measures what consumers are paying in the market, which showed year-on-year inflation was slightly higher than expected .
PPI is considered a leading indicator of inflation because it shows costs early in the supply chain.
The U.S. Bureau of Labor Statistics reported that about two-thirds of the overall PPI increase came from a 1.2% increase in commodity prices, the largest increase since August 2023. Like CPI, energy prices rose by 4.4% as the final demand indicator increased. Wholesale gasoline prices rose 6.8%.
Driven by a 3.8% increase in passenger accommodation services, service costs increased by 0.3%.
Retail industry rebounds
In terms of retail sales, data shows that consumers continue to lead CPI inflation, with CPI rising 0.4% this month, but sales are still sluggish.
Excluding autos, retail sales rose 0.3%, one-tenth of a percentage point less than expected. Auto parts and dealers grew 1.6% this month, second only to building materials and garden centers, which posted a 2.2% gain.
Despite the price drop, gas stations reported a 0.9% price increase. Sales of electronic products and appliances increased by 1.5%, sales of miscellaneous stores increased by 0.6%, and sales of restaurants and bars increased by 0.4%.
Retail sales grew 1.5% year-on-year, lower than the 3.2% increase in CPI.
Wall Street is keeping a close eye on inflation-related data ahead of the Federal Reserve’s two-day policy meeting starting next Tuesday.
While the central bank will almost certainly keep its benchmark interest rate unchanged, markets will be looking for clues about the future of monetary policy. Futures pricing indicates that the Federal Open Market Committee, which sets interest rates, will begin cutting interest rates in June, with cuts expected to be 3 percentage points this year.
At the meeting, policymakers will update their outlook on interest rates, economic growth, inflation and unemployment.
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