The report comes with inflation worries accelerating amid the fighting in the Middle East
Wholesale prices rose 0.7% in February, much more than expected and up 3.4% annually
Wholesale prices rose sharply in February, providing another sign that inflation continues to percolate even aside from rising energy prices.
The producer price index, a measure of pipeline costs that producers receive for their products, increased a seasonally adjusted 0.7% on the month, the Bureau of Labor Statistics reported Wednesday. Excluding volatile food and energy costs, so-called core PPI increased 0.5%. Excluding food, energy and trade services, PPI rose 0.5%.
Economists surveyed by Dow Jones had been looking for increases of 0.3% for both measures.
For the all items index, prices rose faster than the 0.5% pace in January. However, the core increase was less than the 0.8% for the prior month.
On a 12-month basis, PPI inflation was at 3.4%, the most since February 2025, according to the BLS. The Federal Reserve targets inflation at 2%.
The surge in PPI came due in large part to a 0.5% increase in services costs, something the Fed would not welcome. Policymakers have attributed much of the recent run-up in inflation to tariffs, which would not show up as much on the services end. Portfolio management fees, a key driver for services costs within the PPI measurement, were up 1% in February. Similarly, prices for securities brokerage, dealing, investment advice and related services accelerated 4.2%.
Goods prices rose 1.1% on the month.
Food prices rose 2.4% while energy was up 2.3%. Within food, the index for fresh and dry vegetables soared 48.9%.
The report suggests that pipeline inflation pressures remain persistent, particularly on the services side, complicating the Fed’s path as it weighs how long to keep interest rates elevated.
The report comes with inflation worries accelerating amid the fighting in the Middle East. The U.S. and Israel continue to strike at targets in Iran, causing energy prices to surge. Oil has been trading around $100 a barrel, up more than 70% year to date as the conflict has proceeded.
