US producer prices accelerate
LUCIA MUTIKANI
US producer prices increased by the most in eight months in January amid a surge in the cost of hospital outpatient care and goods such as food and motor vehicles, another sign that high inflation could persist through much of this year.
Broadening inflation pressures were underscored by other data on Tuesday showing a measure of prices received by factories in New York state surged to a record high in February, while manufacturers reported they continued to pay higher prices for inputs. The reports followed on the heels of news last week of a strong rise in consumer prices in January, with the annual inflation rate posting its largest increase in 40 years.
Financial markets have priced in a better-than-even chance that the Federal Reserve will raise interest rates next month by half a percentage point.
"This is further evidence of persistent and increasingly embedded inflationary pressure that should keep the Fed leaning towards even more hawkish policy," said Andrew Hollenhorst, chief US economist at Citigroup in New York. "We continue to expect data over the next month will support a 50-basis-point hike by the Fed in March."
The producer price index for final demand jumped 1.0% last month, the biggest advance since May, after climbing 0.4% in December, the Labor Department said.
The PPI was boosted by a 0.7% increase in services, matching the gain in December.
Services were driven by a 1.6% rise in the cost of hospital outpatient care. There were also increases in wholesale retailing for machinery, vehicles, apparel, jewellery as well as footwear. The cost of hotel and motel accommodation rose as did freight transportation by trucks.
Portfolio management fees jumped 1.9%. But margins for fuels and lubricants retailing fell 9.7%. Airline fares dropped 4.2%.
Wholesale goods prices rebounded 1.3% after dipping 0.1% in December. A 0.8% rise in the prices of goods excluding foods and energy accounted for more than 40% of the broad increase in the costs of goods. Motor vehicle prices rose 0.7%.
Food prices advanced 1.6%, while energy products increased 2.5%. But prices for iron and steel scrap fell 10.7%. Healthcare, portfolio and airline fares are key components in the calculation of the personal consumption expenditures (PCE) price index, one of the inflation measures watched by the Fed.-Reuters
US producer prices increased by the most in eight months in January amid a surge in the cost of hospital outpatient care and goods such as food and motor vehicles, another sign that high inflation could persist through much of this year.
Broadening inflation pressures were underscored by other data on Tuesday showing a measure of prices received by factories in New York state surged to a record high in February, while manufacturers reported they continued to pay higher prices for inputs. The reports followed on the heels of news last week of a strong rise in consumer prices in January, with the annual inflation rate posting its largest increase in 40 years.
Financial markets have priced in a better-than-even chance that the Federal Reserve will raise interest rates next month by half a percentage point.
"This is further evidence of persistent and increasingly embedded inflationary pressure that should keep the Fed leaning towards even more hawkish policy," said Andrew Hollenhorst, chief US economist at Citigroup in New York. "We continue to expect data over the next month will support a 50-basis-point hike by the Fed in March."
The producer price index for final demand jumped 1.0% last month, the biggest advance since May, after climbing 0.4% in December, the Labor Department said.
The PPI was boosted by a 0.7% increase in services, matching the gain in December.
Services were driven by a 1.6% rise in the cost of hospital outpatient care. There were also increases in wholesale retailing for machinery, vehicles, apparel, jewellery as well as footwear. The cost of hotel and motel accommodation rose as did freight transportation by trucks.
Portfolio management fees jumped 1.9%. But margins for fuels and lubricants retailing fell 9.7%. Airline fares dropped 4.2%.
Wholesale goods prices rebounded 1.3% after dipping 0.1% in December. A 0.8% rise in the prices of goods excluding foods and energy accounted for more than 40% of the broad increase in the costs of goods. Motor vehicle prices rose 0.7%.
Food prices advanced 1.6%, while energy products increased 2.5%. But prices for iron and steel scrap fell 10.7%. Healthcare, portfolio and airline fares are key components in the calculation of the personal consumption expenditures (PCE) price index, one of the inflation measures watched by the Fed.-Reuters
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