Producer Prices Climbed in February More Than Forecast

Luke Sharrett/Bloomberg News

U.S. producer prices rose in February more than forecast, while costs increased from a year earlier by the most since March 2012, signaling inflation is picking up, a Labor Department report showed March 14 in Washington.

Key Points

• Producer-price index climbed 0.3% from January (forecast was for 0.1% gain) after 0.6% jump that was the biggest since September 2012.

• Over 80% of the advance was due to 0.4% increase in services prices.

• PPI increased 2.2% from February 2016 (estimate was 1.9%) after a 1.6% rise in the previous 12-month period.

• Excluding food and energy, wholesale prices rose 0.3% from the previous month (forecast was 0.2%) and rose 1.5% from February 2016.

Big Picture

Increased global demand is helping to drive up costs of some commodities and allowing price pressures to gradually build in the production pipeline.

Higher wholesale costs can lead broader inflation toward the Federal Reserve’s goal depending on how successful producers are in eventually pushing their costs through to American consumers.

Fed policymakers, meeting March 14 and March 15, are projected to raise interest rates as inflation moves higher and the job market continues to improve.

The Details

• Energy prices rose 0.6% from the prior month; food costs increased 0.3%.

• PPI goods prices advanced 0.3%, the sixth straight rise and led by energy, after a 1% jump.

• Almost 70% of the rise in goods prices is attributable to electric power, which jumped 1.6%.

• Excluding volatile components such as food, energy and trade services, producer costs picked up 0.3% from previous month (forecast was 0.2%) and 1.8% from a year earlier.

• Gain in services costs was largest since June of last year and led by a 4.3% increase in traveler accommodation services.