Inflation surprise: Producer prices rise more than forecast in February, complicating Fed outlook
Inflation surprise: Producer prices rise more than forecast in February, complicating Fed outlook
Jake ConleyWed, March 18, 2026 at 1:06 PM UTC
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US producer prices rose more than twice as fast as expected in February, according to data released Wednesday by the Bureau of Labor Statistics (BLS).
The Producer Price Index (PPI) rose 0.7% in February over the previous month, up from January's 0.5% gain and more than double economists' expectations for an increase of 0.3%.
Excluding the more volatile food and energy costs, producer prices advanced by 0.5% over the previous month, outpacing the 0.3% growth economists had predicted but below the previous month's gain of 0.8%.
On a year-over-year basis, headline prices rose by 3.4%, above estimates of 3% and the previous month's 2.9% year-on-year increase. Wholesale prices excluding those for food and energy gained 3.9% year over year, hotter than estimates of 3.7% and the previous month's 3.6%.
"Intermediate" prices for the inputs businesses buy to produce other goods and services underpinned the headline gains, led by energy goods and energy materials, which rose 5.5% and 6% over the previous month, respectively.
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The Bureau of Labor Statistics noted that "nearly 30 percent of the February rise in the index for processed goods for intermediate demand can be traced to prices for diesel fuel, which increased 13.9 percent."
Headline final demand prices — the closest producer-side measure to consumer prices — were led by food and energy prices, up 2.4% and 2.3%, respectively, over the previous month.
The index for processed goods for intermediate demand, up 1.6% in February, marked the largest monthly increase since gaining 2% in August 2023, the BLS said. The agency also noted that "sixty percent of the February advance is attributable to a 5.5-percent jump in prices for processed energy goods."
Inflation will be top of mind for Fed officials today as they weigh the surge in energy prices from the Iran war against potential growth risks down the line. Fed officials are widely expected to hold interest rates steady at the conclusion of their policy meeting on Wednesday.
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Source: “AOL Money”
