Prices at the wholesale level jumped twice the level expected in January as inflation pressures were unrelenting at the start of the year, the Labor Department said Tuesday.
The Producer Price Index, which measures final demand for goods and services, rose 1% during the month, versus the Dow Jones estimate of 0.5%. Over the past 12 months, the measure has risen an unadjusted 9.7%, close to a record high in data going back to 2010.
Excluding food, energy and commercial services, core PPI rose 0.9% for the month, ahead of estimates of 0.4%. In the 12-month period, the scale increased 6.9%. Core and general PPI gains over the year were 0.1 percentage point lower than record levels set in December 2021.
As has been the case during most of the pandemic era, prices of goods have outpaced those of services, rising by 1.3% and 0.7%, respectively.
The increases come amid rising inflation across the economy, with consumer prices at a 40-year high.
Federal Reserve officials plan to move soon to contain the rate increases, and the rate increases are expected to begin in March and continue throughout the year.
Final demand for energy prices jumped 2.5% in January, while food prices rose 1.6%.
A separate report Tuesday morning showed that manufacturing activity in the New York area changed little in February. The Empire State Manufacturing Survey, conducted by the Federal Reserve in New York, recorded a reading of 3.1, up from -0.7 in January but lower than the 11 estimate.
The metric represents the percentage difference between companies that report expansion versus those that are contracting.
New orders and hiring posted significant gains, but these were mostly outweighed by declines in general working conditions and new orders. Inflation also appeared in that report, as prices in the index rose by 17 points as 58.6% of companies reported an increase in their prices while only 4.5% reported a decrease. The reading of 54.1 was a record high in the data going back to July 2001.
The numbers come a day after the New York Fed’s survey of consumer expectations for January saw a surprising drop in inflation expectations in the short and medium term. The one-year forecast fell to 5.8% from 6% the previous month, while the three-year forecast fell half a percentage point to 3.5%.
Measures of market-dependent inflation over 5 and 10 years remain high but far from the highs seen in November 2021.
However, the Federal Reserve is ready to tighten monetary policy after two years of unprecedented adjustment. Almost all central bank policymakers say they expect a rate hike next month, and the market is pricing in a strong possibility of a 1.75 percentage point increase by the end of 2022.
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