Industry
U.S. producer prices rose strongly in February, leading to the largest annual gain in nearly 2-1 / 2 years, but a major labor market strike could make it harder for businesses to outperform costs. to customers.
PHOTO FILE: Workers remove some of the special valves at Emerson Electric Co.’s factory. in Marshalltown, Iowa, USA, July 26, 2018. REUTERS / Timothy Aeppel
WASHINGTON: U.S. producer prices rose strongly in February, leading to the biggest annual gain in nearly 2-1 / 2 years, but a major labor market strike could make it harder for businesses to offset costs give consumers more.
Producer price index for the final bid rose 0.5per percent last month, the Department of Labor said on Friday. That came after a 1.3per percent jump in January, the biggest increase since December 2009.
In the 12 months through February, the PPI rose 2.8per per cent, the highest since October 2018. The PPI increased 1.7per per cent year-on-year in January. The rise in the PPI last month was in line with expectations of economists.
Manufacturing and services industries have been showing higher production costs as the year-round COVID-19 pandemics up the supply chain. Surveys this month showed a measure of prices paid by manufacturers and service businesses in February raced to levels last seen in 2008.
Inflation is expected to accelerate in the coming months and exceed the Federal Reserve’s 2per per cent target, flexible average, by April as declining coronavirus infections and faster speeds of vaccines allow more economic re-communication.
Part of the expected spike in inflation would be due to early price reductions in diffuse laundry from the numbers. Many economists, including Fed Chairman Jerome Powell, do not expect the strength of inflation to last longer than the so-called fundamental effects.
“Ahead of an increase in metrics this year on fundamental impacts and a more complete reopening of the economy that will lead to a recovery in demand, price pressures are unlikely to accelerate, with a return to incomplete in the labor market, “said Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York.
At least 20.1 million Americans are on unemployment benefits, limiting the ability of businesses to demand higher prices.
U.S. stocks opened lower. The dollar rose against a basket of currencies. U.S. Treasury prices fell.
LOCATION OF FOOD KEY
A 6.0per percent jump in the cost of energy products accounted for more than two-thirds of the overall increase in PPI last month. Energy prices rose 5.1 percent in January.
The cost of services rose 0.1% last month, following a 1.3per percent acceleration in January, the biggest increase since December 2009. Commodity prices rose 1.4per percent, in line with the January gain.
Keeping the food, energy and trading services components volatile, producer prices climbed 0.2per percent. The so-called core PPI accelerated to 1.2per percent in January. In the 12 months through February, the core PPI increased 2.2per percent after gaining 2.0per cents in January.
The Fed monitors the main personal consumption expenses (PCE) index for the inflation target. The US central bank has stated that it would accept higher prices after inflation consistently pushes the target. The PCE base price index is 1.5per percent.
The government has provided nearly US $ 6 trillion in relief since the pandemic in the United States began in March 2020, with President Joe Biden on Thursday signing legislation for his US $ 1.9 trillion package. That, coupled with the Fed’s monthly bond purchases has raised fears from some quarters of the economy overheating.
The government announced this week that its core CPI barely rose in February after remaining unchanged for just two months, which helped ease the concerns of inflation. a spike in the U.S. Treasury product.
In February, wholesale food prices jumped 1.3 percent. Commodity prices rose 0.3per percent after rising 0.8per in January. These prices have gone up as the dollar has weakened against the currencies of major U.S. trading partners.
Prices for end-to-end services of trade, transportation, and warehouse remained unchanged after accelerating 1.4per percent in the previous month. Healthcare costs fell 0.1per percent after rising 1.2per percent in January. Portfolio taxes fell 1.1per percent after rising 9.4per cents in January. These health care and portfolio costs go into the main PCE price list.
(Reporting by Lucia Mutikani; Editing by Alex Richardson and Andrea Ricci)