The Producer Price Index delivered an upside surprise across the board in January, reviving concerns that price pressures remain sticky and complicating the Federal Reserve’s rate-cut timeline.
The Bureau of Labor Statistics reported Friday that headline producer prices rose 0.5% month over month in January, above the 0.3% consensus forecast and accelerating from December’s 0.4% pace.
On a year-over-year basis, the PPI increased 2.9%, well above expectations of 2.6%, though slightly below December’s 3.0%.
Core PPI, which excludes food and energy, jumped 0.8% in January — the highest print since July 2025 — sharply outpacing expectations of 0.3%.
On an annual basis, core producer prices rose 3.6%, again above the 3.0% forecast and up from 3.3% previously.
Services Are The Problem
The producer inflation impulse came from services. Final demand services surged 0.8% in January, the largest gain since July 2025.
More than 20% of that increase came from a 14.4% jump in margins for professional and commercial equipment wholesaling.
Meanwhile, goods prices fell 0.3%, the biggest …
