WASHINGTON — U.S. producer prices increased more than expected in February, and the year-on-year gain was the largest in nearly five years, pointing to a steady rise inflation pressures.þþThe Labor Department said on Tuesday that its producer priceþþindex for final demand increased 0.3 percent last month after rising 0.6 percent in January. Economists polled by Reuters had forecast a 0.1 percent uptick.þþIn the 12 months through February, the PPI jumped 2.2 percent, the biggest advance since March 2012 and ahead of the 2.0 percent gain forecast in the Reuters poll. It followed a 1.6 percent increase in January.þþProducer prices are rising as the prior weak readings, induced by cheap oil, drop out of the calculation. Crude oil prices have risen above $50 per barrel.þþAlso boosting price pressures are the dollar's 1.5 percent drop against the currencies of the United States' main trading partners since January and overall commodity price gains in tandem with a firming global economy.þþA key gauge of underlying producer price pressures that excludes food, energy and trade services increased 0.3 percent in February, the biggest gain since April 2016. The so-called core PPI rose 0.2 percent in January.þþCore PPI increased 1.8 percent in the 12 months through February after advancing 1.6 percent in January.þþThe Federal Reserve has a 2 percent inflation target and tracks a measure that is currently at 1.7 percent. Fed officials were due to start a two-day policy meeting later on Tuesday.þþThe U.S. central bank is expected to raise its overnight benchmark interest rate by 25 basis points to a range of 0.75 percent and 1.00 percent. It has projected three hikes in 2017.þþIn February, prices for final demand services increased 0.4þþpercent, accounting for more than 80 percent of the rise in the PPI. That was the biggest rise since June 2016 and followed a 0.3 percent gain in January.þþThe cost of energy products increased 0.7 percent last month, slowing from January's 4.7 percent surge.þþWholesale food prices increased 0.3 percent after being unchanged in January. Healthcare costs rose 0.2 percent after a similar gain in January. Those costs feed into the Fed's preferred inflation measure, the core personal consumption expenditures index.þþThe volatile trade services component, which measures changes in margins received by wholesalers and retailers, rose 0.4 percent last month after shooting up 0.9 percent in January.þþ(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Lisa Von Ahn)
Source: NY Times
