Higher prices for energy, food, and transportation and warehousing led a 0.4% month-over-month increase in the Producer Price Index for final demand in January.
The PPI, which measures wholesale prices, also saw a year-over-year increase of 3.5%, the Bureau of Labor Statistics (BLS) said in a Thursday (Feb. 13) press release.
Because the PPI measures wholesale prices, meaning some of the input costs that are tied to the day-to-day cost for merchants and other businesses, its changes generally lead to changes in the Consumer Price Index down the line.
The BLS press release characterized January’s increase as “broad-based,” as prices for both final demand goods and final demand services rose during the month.
Final demand goods increased 0.6% month over month, with energy up 1.7% and foods up 1.1%, according to the release. Final demand goods less foods and energy increased 0.1%.
“In January, a 10.4% increase in the index for diesel fuel was a major factor in the advance in prices for final demand goods,” the release said.
Final demand services increased 0.3% month over month, driven by transportation and warehousing, which rose 0.6%, per the release.
“Over one-third of the January rise in the index for final demand services can be traced to prices for traveler accommodation services, which advanced 5.7%,” the release said.
The 0.4% month-over-month increase in the PPI for final demand followed a 0.5% increase in December and a 0.2% rise in November, according to the release.
January’s increase was higher than that forecast by economists surveyed by Bloomberg, who expected a 0.3% rise. The increase preceded the U.S. government’s imposition of higher tariffs.
Reuters, too, reported Thursday that the economists it polled had expected a 0.3% increase in the PPI in January. The increase suggested that inflation is picking up and that the Federal Reserve is unlikely to cut interest rates in the first half of the year.
The BLS reported Wednesday (Feb. 12) that the Consumer Price Index rose 0.5% in January and that several components of consumers’ essential spending are getting more expensive.
