Input Stories

Wholesale costs for final demand goods and services rose at the fastest pace in five months in January, according to the Associated Press.

What’s going on: “The Labor Department reported Friday that its producer price index—which tracks inflation before it reaches consumers—rose 0.3% from December to January after having fallen 0.1% from November to December. Measured year over year, producer prices rose by a mild 0.9% in January.”

• January’s gain was the strongest monthly increase since August and exceeded economist expectations of a 0.1% rise.
• The data’s release follows news earlier this week that consumer prices rose more than expected.

The details: The numbers were boosted by significant gains in costs for producer services, but producer prices for final demand goods declined for the fourth month in a row.

• Producer prices for services rose 0.6% in January, while prices for final demand goods fell 0.2%.
• Food and energy costs dropped 0.3% and 1.7% last month, respectively, with year-over-year cost declines of 3.6% and 9.9%.

The NAM’s view: “The increase in monthly inflation was due largely to growth in service-sector prices in January,” NAM Chief Economist Chad Moutray said. “This shows how stubborn these costs have been … [but] the longer-term trend continues to reflect disinflation for raw materials in the economy—a trend that is very encouraging for manufacturers.”