Washington [US], March 20: US wholesale prices came in hotter than expected in February, driven partly by a sharp increase in food costs.
The Labor Department reported Wednesday that its producer price index - which measures inflation before it hits consumers - rose 0.7 percent from January, and 3.4 percent from February 2025. The year-over-year increase was the most since February 2025.
The price gains were bigger than economists had forecast, and they occurred before the US and Israel attack on Iran pushed energy prices sharply higher."These are some mighty big increases, adding fuel to the political conversation about affordability," wrote Carl B. Weinberg, the chief economist at High Frequency Economics. "And of course, energy prices will spike higher in the Marchreport, thanks to the war in Iran and the blockade of the Strait of Hormuz." Oil prices have surged nearly 50 percent since the Iran war began, and gasoline prices are following close behind.
The average price for a gallon of gasoline in the US spiked again overnight, reaching $3.84. A gallon of gas last month, before the US and Israel attacked Iran, was well under $3. Diesel prices, used heavily in transportation, are rising even faster.
Excluding volatile food and energy prices, so-called core wholesale prices rose 0.5 percent from January, down from a 0.8 percent gain the month before but more than twice what economists had expected. Compared with a year earlier, core prices rose 3.9 percent, the biggest jump since January 2025.
Food prices rose 2.4 percent from January, led by a 49 percent surge in vegetable prices and a 10 percent increase in fruit prices.
Food prices are still down compared with a year ago, but some economists see problematic trends developing on the inflation front, starting with the higher prices that producers are now paying.
Wholesale inflation also rose unexpectedly in January.
The January numbers could be written off as a blip, said Stephen Stanley, the chief US economist at Santander. In commentary Wednesday, he called the surge in wholesale prices in February a "sign of trouble." Stanley said companies have largely been absorbing higher costs that have arrived following tariffs implemented by the Trump administration.
"The problem is the (producer price index) is signaling that this is not a one-off wave of costs that would necessitate a single set of consumer price adjustments," Stanley wrote. "Instead, the pipeline pressures continue to build." The newest economic indicator arrived on the same day that policymakers at the Federal Reserve are meeting in Washington to decide what to do about the nation's benchmark interest rate.
Source: Qatar Tribune