Inflation Rebound in January as PPI Increases More Than Expected
By The Labor Department's report on Thursday showed that inflation had a rebound in January, with producer prices increasing more than anticipated at the wholesale level.[0]
According to the report, the Producer Price Index for final demand increased 0.7% in January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported on Thursday.[1] In December 2022, final demand prices decreased by 0.2%, while they increased by 0.3% in November.[2] The index for final demand increased 6.0 percent over the twelve-month period ending January 2023 without adjustment.[2]
Excluding food, energy, and trade services, producer prices climbed by 0.6 percent in January after edging up by 0.2 percent in December.[3] The rise was the biggest increase since last March.[3] The index for final demand less foods, energy, and trade services rose 0.6%, the largest advance since March 2022.[4]
The Labor Department also said that prices for services rose by 0.4 percent for the second straight month, reflecting 0.2 percent upticks in prices for trade and transportation and warehousing services and a 0.6 percent increase in prices for other services.[5] The index for hospital outpatient care increased 1.4 percent.[6]
Headline PPI rose 6% over the span of 12 months, remaining high but not as high as its 11.6% peak in March 2022.[7] According to a Bloomberg survey of economists, the median estimates were for the index to rise 0.4% from the previous month and 5.4% from January 2022.[1] The core prices, not including food and energy, increased by 5.4%, surpassing expectations of 4.9%, and lower than the 5.5% reading from the previous report.[8]
The inflation rate spike in January was attributed primarily to some seasonal factors as well as payback from previous months that showed more muted price increases.[0] The unusually warm winter could have been a factor, and fuel prices, which are unpredictable, also increased during the month.[0]
It is anticipated that the Federal Reserve will increase interest rates by a quarter of a percentage point when they convene next month.[9] It has been hoped that the Federal Reserve was close to wrapping up its cycle of rate increases.[10] Data showing higher temperatures than predicted may prompt the Federal Reserve to maintain its strong position for a longer period.[10]
0. “Crypto Market Tumbles After U.S. PPI Data Comes At 6%” CoinGape, 16 Feb. 2023, https://coingape.com/crypto-market-tumbles-after-u-s-ppi-data-rises-0-7-in-january/
1. “Higher Gasoline Prices Drive U.S. Producer Price Index Higher” OilPrice.com, 16 Feb. 2023, https://oilprice.com/Latest-Energy-News/World-News/Higher-Gasoline-Prices-Drive-US-Producer-Price-Index-Higher.html
2. “Producer Price Index – January 2023” Forex Factory, 16 Feb. 2023, https://www.forexfactory.com/news/1206036-producer-price-index-january-2023
3. “U.S. Producer Prices Climb 0.7% In January, More Than Expected” RTTNews, 16 Feb. 2023, https://www.rttnews.com/3344710/u-s-producer-prices-climb-0-7-in-january-more-than-expected.aspx
4. “Producer Prices Rose 0.7% in January” Floor Focus, 16 Feb. 2023, https://www.floordaily.net/flooring-news/producer-prices-rose-07-in-january
5. “Producer prices rose in January but annual inflation continued to cool – Local News 8” LocalNews8.com, 16 Feb. 2023, https://localnews8.com/news/economy/2023/02/16/producer-prices-rise-in-january-but-annual-inflation-continues-to-cool
6. “Wholesale Inflation Rose More Than Expected in January” Investopedia, 16 Feb. 2023, https://www.investopedia.com/wholesale-inflation-rose-more-than-expected-in-january-2023-7110567
7. “Wholesale prices rose 0.7% in January, more than expected, fueling inflation increase” CNBC, 16 Feb. 2023, https://www.cnbc.com/2023/02/16/producer-price-index-january-2023-.html
8. “US producer prices rise past expectations on a yearly basis” Economies.com, 16 Feb. 2023, https://www.economies.com/forex/news/us-producer-prices-rise-past-expectations-on-a-yearly-basis-42412
9. “Producer Prices Rose, Pointing to Persistent Inflation” MarketWatch, 16 Feb. 2023, https://www.marketwatch.com/story/producer-prices-rose-pointing-to-persistent-inflation-4dda60ef
10. “U.S. stocks are falling after hotter-than-expected producer prices By Investing.com” Investing.com UK, 16 Feb. 2023, https://uk.investing.com/news/stock-market-news/us-stocks-are-falling-after-hotter-than-expected-producer-prices-2917550
