Producer prices rise in January

Producer prices rose more than expected in January.

PPI for final demand increased 0.1% month-on-month, and fell 0.2% year-on-year.

A 1% increase in food costs, especially for fresh vegetables and beef, led the rise in costs that producers paid.

Energy prices tumbled 5%.

Economists had estimated that PPI for final demand fell 0.2% month-on-month in January, and dropped 0.6% year-over-year, according to Bloomberg.

Leaving out volatile food and energy costs, PPI rose 0.4% compared to December, and rose 0.6% year-on-year.

Excluding food and energy, economists had forecast that producer prices rose 0.1% compared to December, and increased 0.4% against the prior year.

The PPI data look at inflation from the producers’ perspective, and are used as a forward-looking indicator for consumer prices, since sellers would likely pass their higher costs to buyers through more expensive items on shelves.

The consumer price index (CPI) will be released Friday.

Inflation is still shy of the Fed’s 2% target, but the PPI numbers show that the weakness may be starting to fade, according to Barclays’ Rob Martin in a client note.

“We continue to expect past appreciation of the dollar and the ongoing softness in commodity prices to weigh on price inflation throughout this year but this report suggests that ongoing strength in the domestic economy may offset some of these external pressures.

NOW WATCH: We did a blind taste test of Pizza Hut, Domino’s, and Papa John’s pizza — here’s the verdict

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