Producer Prices in US Rose by 0.4% Last Month
Producer prices in the US accelerated growth last month. Data from the US Labor Department showed that producer price index increased by 0.4% in January after being unchanged in December. The PPI grew by 2.7% on annual basis in January after advancing 2.6% in December. Core PPI rose by 0.1% in December.
Wholesale goods prices rose by 0.7% last month, after 0.1% increase in December. Gasoline prices, which rose 7.1%, accounted for nearly half of the increase in the cost of goods last month. Wholesale food prices fell for a second straight month. Core goods prices rose 0.2% for the second consecutive month.
Data on the PPI bolsters expectations that inflation will gain steam this year even though its correlation with consumer prices has weakened. Economists believe that a tightening labor market, weak dollar and fiscal stimulus in the form of a $1.5 trillion tax cut package and increased government spending will lift inflation toward the Federal Reserve’s 2% target this year.