Input Stories

Producer prices for final demand goods and services increased 0.7% in January, following a 0.2% decline in December, according to the U.S. Department of Labor. The rise marked the largest monthly gain since June.

Just the goods: Producer prices for final demand goods alone rose 1.2% in January, after declining 1.4% in December.

Food and energy: Producer prices for energy costs jumped 5.0% in January.

• Food prices, however, declined for the second month in a row, by 1.0%.
• In the past year, food and energy prices have risen 11.5% and 10.3%, respectively.

Everything else: Excluding food and energy, producer costs for final demand goods spiked 0.6% in January, an increase from 0.1% in December and the quickest pace since May.

Overall: In the past year, producer costs for final demand goods and services have increased 6.0%, a decline from December’s 6.5% and the lowest reading in nearly two years.

• Core producer prices rose 4.5% year-over-year, down slightly from 4.7% in December.

The last word: “Overall, these data provide mixed comfort,” said NAM Chief Economist Chad Moutray. “On the one hand, there are signs of continuing moderation in wholesale inflation—particularly in the year-over-year data—that are encouraging.”

• “Yet the data also show that input costs continue to rise steadily and at paces that are higher than we would prefer. This latter trend is likely to continue to put pressure on the Federal Reserve, both in terms of its aggressiveness and in the timing for reaching the terminal rate.”