Input Stories

Inflation in the U.S.—as measured by wholesale prices—rose in January (Reuters, subscription).

What’s going on: “The producer price index for final demand rose 0.4% last month after an upwardly revised 0.5% gain in December, the Labor Department’s Bureau of Labor Statistics said on Thursday. Economists polled by Reuters had forecast the PPI rising 0.3%. In the 12 months through January, the PPI advanced 3.5% after increasing 3.3% in December.”

• Consumer prices, released yesterday, also rose more than expected in January.

Core PPI: Core producer prices, which exclude often-volatile food and energy costs, increased 0.3% last month from December and 3.2% from January 2024.

The Fed says: Speaking to Congress yesterday, Federal Reserve Chairman Jerome Powell said the central bank is “close but not there yet on inflation,” adding, “we want to keep policy restrictive for now.”

• The Fed held its benchmark interest rate steady at 4.25–4.50% at its January meeting.
• It hiked the rate 5.25 percentage points in 2022 and 2023 in a bid to temper inflation.

Why it’s important: “Wholesale prices can offer an early look at where consumer inflation might be headed,” according  to the AP. “Economists also watch it because some of its components, notably health care and financial services, flow into the Federal Reserve’s preferred inflation gauge—the personal consumption expenditures, or PCE, index.”

The last word: Though higher than anticipated, “the components that feed into the Fed’s preferred PCE price measure were, on the whole, very tame,” Capital Economics Chief North America Economist Paul Ashworth wrote in a commentary, according to the AP.