Investors hoping inflation was gliding down got a jolt from January's wholesale price report. The Bureau of Labor Statistics said on Friday that producer prices, a key gauge of inflation pressures earlier in the supply chain, rose more than economists anticipated. Core producer prices, which leave out more erratic food and energy costs, climbed 0.8% for the month—more than double the consensus forecast—and are up 3.6% over the past year, per CNBC.
The overall producer price index advanced 0.5% in January—Dow Jones and Wall Street Journal economist consensus had predicted a 0.3% jump—and 2.9% year over year, both above the Federal Reserve's 2% target. The jump was driven largely by services, where prices posted their biggest monthly gain since mid-2025, while overall goods prices slipped even as core goods prices rose. Trade services saw a 2.5% increase, while more than one-fifth of the services bump emerged out of wholesaling margins for professional and commercial equipment.
The data lands as President Trump continues to maintain that inflation is under control, and as Wall Street bets the Fed will delay cutting interest rates until at least the summer, despite pressure from the White House to do some rate slashing. "Tariffs are being passed through along the supply chain," Michael Reid, US economist at RBC Capital Markets, told CNN. "And so, our worry is that this is not the end of the pass-through. We have not yet seen the full impact on consumer prices in the goods space."
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