Breaking News
Investing Pro 0
Cyber Monday Extended SALE: Up to 60% OFF InvestingPro+ CLAIM OFFER

U.S. Producer Prices Rise 10%, Setting Stage for Fed Rate Hike

Economic Indicators Mar 15, 2022 21:00
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters
 
US2YT=X
+2.99%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

(Bloomberg) -- Prices paid to U.S. producers rose strongly in February on higher costs of goods, underscoring inflationary pressures that set the stage for a Federal Reserve rate hike this week. 

The producer price index for final demand increased 10% from February of last year and 0.8% from the prior month, Labor Department data showed Tuesday. That followed an upwardly revised 1.2% monthly gain in January.

The median forecasts in a Bloomberg survey of economists called for a 10% year-over-year increase and a 0.9% monthly advance.

Two year Treasury yields extended declines and U.S. stock futures rose after the data showed producer prices rose less than expected on a monthly basis.

The data reflect the biggest monthly gain in the price of goods in data back to 2009, with two-thirds of the increase due to energy. It’s the latest indication of rapid inflation in the U.S., and prices are poised to accelerate further after Russia’s invasion of Ukraine sent prices of some raw materials to new highs. 

While that bolsters the case for the Fed to be aggressive in tamping down inflation in the coming months, the central bank will have to balance curbing inflation without stifling economic growth.

The Fed will have the latest inflation data in hand for its meeting that concludes Wednesday, when policy makers are widely expected to increase interest rates for the first time since 2018. Along with the decision, the Fed will release updated forecasts for inflation and growth.

The data suggest persistent inflationary pressures in production will filter through to consumer prices, which rose in February at the fastest pace in 40 years, in part due to higher gasoline, food and housing costs. That’ll only worsen given the war, and China’s lockdown of Shenzhen -- one of the nation’s most populous cities and a technology hub -- is expected to disrupt fragile supply chains even more.

Core Prices

Excluding the volatile food and energy components, the so-called core PPI increased 0.2% from a month earlier and was up by a 8.4% from a year ago, both missing estimates. 

There were signs in other parts of the economy that inflationary pressures were cooling. Prices for final demand services were little changed from January, the first month without an increase since December 2020. An increase in transportation and warehousing services costs was offset by declines in portfolio management and apparel and accessories retailing.

(Adds grtwoaphic)

©2022 Bloomberg L.P.

 

U.S. Producer Prices Rise 10%, Setting Stage for Fed Rate Hike
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email