January PPI Report Shows Producer Prices Rose, Pointing to Persistent Inflation

The PPI increased 0.7% in January from the prior month, compared with a revised 0.2% drop in December, and significantly faster than the 0.2% average monthly rise in the year before the pandemic.

A separate Labor Department report this week showed consumer prices rose 6.4% in January, from a year before, down slightly from 6.5% in December and marking the seventh straight month of easing inflation.

Federal Reserve officials in recent public appearances have steeled themselves for a long inflation fight. Fed officials earlier this month raised their benchmark federal-funds rate by 0.25 percentage point, bringing it to a range between 4.5% and 4.75%, the highest level since 2007. Officials are on track to raise interest rates at their meeting in March and to signal further increases will be likely.

“We must remain prepared to continue rate increases for a longer period than previously anticipated if such a path is necessary to respond to changes in the economic outlook or to offset any undesired easing in conditions,” said Dallas Fed President

Lorie Logan

in remarks Tuesday in Prairie View, Texas.

The broader economy has shown signs of resilience early this year, after consumers pulled back late last year and several large companies have announced layoffs. The unemployment rate last month fell to 3.4%, the lowest level since 1969, and retail sales jumped 3% in January as consumers broadly boosted spending on vehicles, furniture, clothing and dining out.

Strong demand and low unemployment can put upward pressure on prices.

The PPI captures what suppliers are charging businesses and other customers. The measure generally reflects the changes in costs that producers are facing combined with the pricing power they command, which can signal future changes to inflationary pressures.

The January report showed goods prices rose from a month earlier, largely reflecting energy products. Good prices had decreased in December. Services prices rose at the same monthly rate as in December.

The so-called core price index—which excludes the often-volatile categories of food, energy and supplier margins—climbed 0.6% in January from a month earlier, after gaining a revised 0.2% in December. On a 12-month basis, core PPI rose 4.5%, a cooling from a revised 4.7% gain in December.

—Gwynn Guilford contributed to this article.

Write to Gabriel T. Rubin at [email protected]

The PPI increased 0.7% in January from the prior month, compared with a revised 0.2% drop in December, and significantly faster than the 0.2% average monthly rise in the year before the pandemic.

A separate Labor Department report this week showed consumer prices rose 6.4% in January, from a year before, down slightly from 6.5% in December and marking the seventh straight month of easing inflation.

Federal Reserve officials in recent public appearances have steeled themselves for a long inflation fight. Fed officials earlier this month raised their benchmark federal-funds rate by 0.25 percentage point, bringing it to a range between 4.5% and 4.75%, the highest level since 2007. Officials are on track to raise interest rates at their meeting in March and to signal further increases will be likely.

“We must remain prepared to continue rate increases for a longer period than previously anticipated if such a path is necessary to respond to changes in the economic outlook or to offset any undesired easing in conditions,” said Dallas Fed President

Lorie Logan

in remarks Tuesday in Prairie View, Texas.

The broader economy has shown signs of resilience early this year, after consumers pulled back late last year and several large companies have announced layoffs. The unemployment rate last month fell to 3.4%, the lowest level since 1969, and retail sales jumped 3% in January as consumers broadly boosted spending on vehicles, furniture, clothing and dining out.

Strong demand and low unemployment can put upward pressure on prices.

The PPI captures what suppliers are charging businesses and other customers. The measure generally reflects the changes in costs that producers are facing combined with the pricing power they command, which can signal future changes to inflationary pressures.

The January report showed goods prices rose from a month earlier, largely reflecting energy products. Good prices had decreased in December. Services prices rose at the same monthly rate as in December.

The so-called core price index—which excludes the often-volatile categories of food, energy and supplier margins—climbed 0.6% in January from a month earlier, after gaining a revised 0.2% in December. On a 12-month basis, core PPI rose 4.5%, a cooling from a revised 4.7% gain in December.

—Gwynn Guilford contributed to this article.

Write to Gabriel T. Rubin at [email protected]