Wholesale inflation climbed 0.8% in February, lower than estimate but still up 10% from last year

Key Points
  • The producer price index rose 0.8% in February, slightly lower than the 0.9% Dow Jones estimate.
  • Wholesale gasoline prices surged more than 14%, helping feed the biggest single-month increase for final demand goods prices ever in data going back to 2009.
  • Headline PPI was up 10% from a year ago, tying January for the biggest gain ever.
February producer price index rises 0.8%, slightly lower than expected
February producer price index rises 0.8%, slightly lower than expected

Another surge in energy prices pushed wholesale goods prices to their biggest one-month jump on record in February, according to Labor Department data released Tuesday.

Final demand prices for goods jumped 2.4% for the month, the largest move ever in data going back to December 2009, the Bureau of Labor Statistics said.

That pushed the headline producer price index up 0.8% on the month, which actually was slightly lower than the 0.9% Dow Jones estimate.

Excluding food, energy and trade services, so-called core PPI rose just 0.2%, well below the 0.6% expectation.

On a year-over-year basis, headline PPI rose 10%, the same as January and tied for the biggest 12-month move ever.

The data came during the week of Feb. 13, before the Russian invasion of Ukraine. Energy prices surged even more as the war began, and will show up in next month's report.

The numbers coincide with most other inflation gauges running around 40-year highs, thanks to price increases that have spread beyond volatile gas and grocery prices and across a broad spectrum of consumer goods and services.

In response to the inflation trend, the Federal Reserve is expected on Wednesday to raise interest rates for the first time since December 2018.

"Producer prices are an early warning sign of what households can expect in terms of consumer price inflation," wrote PNC economist Kurt Rankin. "The message is clear that consumer prices have several months of exceptional gains ahead of them still, despite the fact that the Fed is set to begin hiking its policy rate in March and continue to do so throughout the year."

Gasoline was still the main story in February when it came to final demand prices.

Some 40% of the increase in wholesale goods prices came from gasoline, which rose 14.8%. Diesel fuel and electric power also helped feed an 8.2% increase in final demand energy prices, while motor vehicles and equipment and dairy prices also climbed. Various prices for food products, such as fresh and dry vegetables along with beef and veal showed declines.

The PPI is not as closely watched as the consumer price index, but wholesale costs feed into prices at the register and are seen as a harbinger of inflation.