According to Labor Department data, Tuesday’s release of Tuesday data showed that wholesale prices saw another surge in energy costs in February.
The Bureau of Labor Statistics reported that final demand for goods rose 2.4% in the last month. This is the biggest increase ever recorded by data dating back to December 2009.
This pushed the headline producer price indicator up 0.8% for the month. However, this was actually slightly less than the Dow Jones 0.9% estimate.
The core PPI, which excludes food, energy, and trade services, rose 0.2%, far below the expectation of 0.6%.
The headline PPI increased 10% year over year, which was the same rate as January, and is tied for the largest 12-month increase ever.
These data were available during week 13 of February, before the Russian invasion of Ukraine. The war brought about an even greater rise in energy prices. Next month’s report will reflect this fact.
These figures are similar to most inflation gauges at around 40-year heights. Price increases beyond volatile gas prices and grocery prices have pushed up the cost of many other consumer goods, services and products.
The Federal Reserve will likely raise interest rates Wednesday as a response to rising inflation. This is the first increase since December 2018.
Kurt Rankin, a PNC economist wrote that producer prices were a warning sign about what consumers can expect from inflation in consumer price. “Despite the fact that the Fed has already begun increasing its policy rates in March, the message is clear. Consumer prices are still on the verge of making extraordinary gains.
In February, when final demand prices were set for gasoline, the story was still about gasoline.
About 40% of wholesale product prices rose due to the rise in gasoline prices, which rose by 14.8%. The 8.2% rise in final demand energy prices was also due to diesel fuel and electric power. Motor vehicles, equipment, and dairy prices also increased. Different food products saw declines in prices such as beef, veal and fresh vegetables.
While the PPI may not be as closely monitored than the consumer price index (CPI), wholesale costs can affect prices at registers and could indicate inflation.