By Lucia MutikaniWASHINGTON (Reuters) -U.S. producer prices increased solidly in January, offering more evidence inflation was picking up again and strengthening financial market views that the Federal Reserve would not be cutting interest rates before the second half of the year.The broad rise in producer inflation reported by the Labor Department on Thursday followed on the heels of news on Wednesday that consumer prices accelerated by the most in nearly 1-1/2 years in January. Some details of the report, however, suggested a more moderate increase in January in the key inflation measures tracked by the U.S. central bank for its 2% target than had been anticipated in the wake of the strong CPI data.Economists warned inflation was set to trend even higher as President Donald Trump presses ahead with broad tariffs on imports as well as mass deportations that could cause labor shortages and raise wages and prices of goods.”The report does give pause to rate cut expectations, however, as higher business costs are likely to translate into upward pressure on consumer prices in the months to come,” said Kurt Rankin, a senior economist at PNC Financial. “Tariffs continue to be threatened by the Trump administration, which would raise costs for businesses across the board.”The producer price index for final demand rose 0.4% last month after an upwardly revised 0.5% gain in December, the Labor Department’s Bureau of Labor Statistics (BLS) said. Economists polled by Reuters had forecast the PPI rising 0.3%.In the 12 months through January, the PPI advanced 3.5% after increasing by the same margin in December. With January’s PPI report, the BLS updated weights to reflect price movements in 2024, and seasonal adjustment factors, the model that the government uses to iron out seasonal fluctuations from the data.The rise in the PPI was across goods and services. Wholesale goods prices jumped 0.6% after rising 0.5% in December. More than half of the increase came from a 1.7% jump in energy goods prices. Food prices shot up 1.1%, with egg prices soaring 44.0% amid an avian flu outbreak. Excluding food and energy, goods prices edged up 0.1% for a second straight month.Services increased 0.3% after climbing 0.5% in December. A 5.7% surge in wholesale prices of hotel and motel rooms accounted for more than a third of the increase in services.There were also increases in wholesale prices of automobile retailing, transportation of freight by road, food and alcohol retailing as well as apparel, jewelry, footwear and accessories retailing and bundled wired telecommunications.But margins for fuels and lubricants retailing fell 9.8%. Portfolio management fees rose 0.4%, while airline fares decreased 0.3%. Physician care prices declined 0.5% and the cost of hospital inpatient care fell 0.3%. Hospital outpatient care prices declined 0.4%.Portfolio management fees, healthcare, hotel and motel accommodation and airline fares are among the components that go into the calcula
Gio. Feb 13th, 2025
