Wholesale Inflation Rose More Than Expected in January

The Producer Price Index (PPI) rose 0.7% last month, well above forecasts of 0.4%

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Wholesale inflation jumped more than expected last month, driven higher by rising prices for energy.

The Labor Department’s Producer Price Index (PPI) rose 0.7%, well above economists' forecasts of 0.4%, after declining 0.2% in December. The year-over-year increase was 6%, down from 6.5% in December but well above projections of 5.4%.

The PPI excluding foods, energy, and trade services was up 0.6%, the largest monthly rise since March 2022, and also above economists' forecasts. The annual rate was 4.5% higher.

Cost of Goods Jumps

Final demand prices for goods advanced 1.2%, the most in seven months, led by a 5% gain in energy costs. Almost a third of the overall change in goods prices was attributable to a 6.2% spike in the cost of gasoline. Food prices dropped 1%, with fresh and dry vegetables prices plunging 35.5%.

Final demand prices for services increased 0.4%, the same as the month before. The department indicated a major factor behind the rise was the index for hospital outpatient care, which was up 1.4%.

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  1. Bureau of Labor Statistics (BLS). "Producer Price Indexes—January 2023."

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