Financial News: U.S. Producer Prices Climb 0.7% In February, Much

U.S. Producer Prices Climb 0.7% In February, Much More Than Expected

(RTTNews) - Producer prices in the U.S. increased by much more than expected in the month of February, according to a report released by the Labor Department on Wednesday.

The Labor Department said its producer price index for final demand advanced by 0.7 percent in February after climbing by 0.5 percent in January. Economists had expected producer prices to rise by 0.3 percent.

The report also said the annual rate of growth by producer prices accelerated to 3.4 percent in February from 2.9 percent in January. Yearly growth was expected to remain unchanged.

"This isn't the kind of PPI report the Fed wants to see," said Nationwide Financial Markets Economist Oren Klachkin. "This report suggests inflation was going to accelerate even before the Iranian conflict hit."

The bigger than expected monthly increase by producer prices partly reflected substantial rebounds in prices for food and energy.

Food prices surged by 2.4 percent in February after slumping by 1.4 percent in January, while energy prices shot up by 2.3 percent in February after tumbling by 2.3 percent in January.

The higher prices for food and energy contributed to a 1.1 percent jump in prices for goods in February following a 0.2 percent dip in January.

The Labor Department said prices for services also rose by 0.5 percent in February after climbing by 0.8 percent in January.

Prices for trade services increased by 0.4 percent, prices for transportation and warehousing services grew by 0.5 percent and prices for other services climbed by 0.6 percent.

The report said core producer prices, which exclude prices for food, energy and trade services, rose by 0.5 percent in February after increasing by 0.4 percent in January.

The annual rate of growth by core producer prices ticked up to 3.5 percent in February from 3.4 percent in the previous month.

A separate report released by the Labor Department last Wednesday showed consumer prices in the U.S. increased in line with economist estimates in the month of February.

The Labor Department said its consumer price index climbed by 0.3 percent in February after rising by 0.2 percent in January. The growth matched expectations.

Excluding food and energy prices, core consumer prices rose by 0.2 percent in February after increasing by 0.3 percent in January, which was also in line with estimates.

The report also said the annual rates of growth by both consumer prices and core consumer prices were unchanged from the previous month at 2.4 percent and 2.5 percent, respectively.

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