In February, wholesale prices rose faster than projected, highlighting the U.S. economy's inflation problem.
The Labor Department's Bureau of Labor Statistics stated Thursday that the producer price index, which tracks pipeline costs for raw, intermediate, and finished items, rose 0.6% on the month. That exceeded Dow Jones' 0.3% projection and follows a 0.3% increase in January.
The core PPI rose 0.3% without food and energy, compared to 0.2% expected. Another indicator that excludes trade services grew 0.4%, compared to 0.6% in January and 0.2% over the projection.
The headline index rose 1.6% year-over-year, the largest increase since September 2023. The data did not deter Wall Street's optimistic start. All major stock market index futures were bullish, while Treasury yields increased.
Retail sales rose 0.6% on the month, according to Commerce Department statistics adjusted seasonally but not for inflation, on a busy economic morning. The growth reversed a downwardly revised 1.1% January drop, but it was below the 0.8% projection.
The PPI is a leading inflation indicator because it shows supply chain costs early on. The BLS noted that goods prices rose 1.2%, the highest increase since August 2023, accounting for two-thirds of the headline PPI gain. Like the CPI, energy prices drove the 4.4% increase in final demand. Wholesale gasoline prices rose 6.8%.
Retail sales, excluding car, climbed 0.3%, 0.10% below expectations. Motor vehicle parts and dealers rose 1.6%, second only to building materials and garden outlets at 2.2%. Gas stations gained 0.9% despite falling prices. Electronics and appliance sales jumped 1.5%, miscellaneous retail sales 0.6%, and restaurants and bars 0.4%.
While the central bank is certain to maintain its benchmark interest rate, markets will hunt for monetary policy indications. Futures pricing suggests the Federal Open Market Committee will drop interest rates three quarter-percentage points this year in June. Policymakers will update rates, economic growth, inflation, and unemployment forecasts at the meeting.
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