US producer prices come in a tad higher than forecast in January
By Alexander Bueso
Date: Thursday 13 Feb 2025
(Sharecast News) - Inflation at the wholesale level in the US came in a tad hotter-than-expected at the start of 2024.
According to the US Department of Labor, in seasonally adjusted term, so-called final demand prices increased at a month-on-month pace of 0.4% in January.
That was only one tenth of a percentage point more than forecast by economists.
However, the prior month's rate of increase was revised up from an initial estimate of 0.2% to 0.5%.
Driving the gain were a 1.1% jump in the cost of food and a 1.7% advance in that of gasoline.
On the services side of the equation, prices were up 0.3%, with those for trade only edging up by 0.1%, albeit after a 0.6% gain during the prior month.
Trade prices include retailers' margins.
Headline final demand prices were ahead by 3.5% year-on-year, the same clip as had been observed in December.
"Overall, better news than yesterday on price inflation, but core PCE still comes in well above the 2% target, and the Fed will be braced for bigger increases in PCE in February and March too, repeating what happened last year," said Paul Ashworth, chief North America economist at Capital Economics.
"With a widespread increase in tariffs coming, core PCE inflation is likely to end this year close to 3%, making it unlikely that the Fed will resume cutting interest rates any time soon."
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