U.S. Wholesale prices rose 0.7 percent over the same month last year, seasonally adjusted, the largest increase since March 2022.
Experts see the increase as an indication that the inflation hampering the U.S. economy for more than 18 months will continue into 2023.
The Bureau of Labor Statistics (BLS) released the Producer Price Index (PPI) on Feb. 16, which measures changes in prices charged by producers of goods and services.
The PPI for goods rose more (1.4 percent) than the price of services (0.4 percent) in January.
About one-third of the rise in goods is attributable to gasoline, which increased 6.2 percent according to the BLS. Other fuels, including natural gas, diesel fuel, and jet fuel also rose, as did the price of soft drinks and cars.
The biggest price drop was for fresh vegetables, which decreased by 33.5 percent.
The largest price increases for services were for those not including trade, transportation, and warehousing. The price of hospital outpatient care rose 1.4 percent.
Retail service prices for fuels and lubricants fell 17.5 percent.
The BLS reported on Feb. 14 that the Consumer Price Index (CPI) also rose in January, increasing 6 percent over the previous year, seasonally adjusted.
The CPI traces price changes in goods purchased by households.
Though U.S. inflation has lessened since mid-2022, it remained at 6.4 percent for the 12 months ending in January.
To combat that, the Federal Reserve Board has raised interest rates eight times over the past year, arriving this month at 4.5 to 4.75 percent, the highest rate in 16 years.
“Inflation remains well above our goal of 2 percent,” Loretta J. Mester, president of the Federal Reserve Bank of Cleveland, said in a speech on Feb. 16.
“In the current period of high inflation, which began in the spring of 2021, core goods prices have been rising, and for much of this period until recently, inflation in core goods has exceeded inflation in core services. To achieve our longer-run goal of 2 percent inflation, we will need to see continued sustained disinflation in both components,” said Mester.
She predicted that inflation would move downward this year and reach the 2 percent benchmark by 2025.
Markets reacted poorly to the news of price hikes. The Dow Jones Industrial Average fell 1.1 percent on the release of the BLS report. The S&P 500 fell 1.2 percent and the Nasdaq-Composite lost 1.5 percent.
