Rising prices for food, cars and electricity pushed US producer prices up 0.3% in January while prices outside of food and energy climbed 0.4% - twice expectations and the fastest wholesale inflation in a year, a government report shows today.
The rise in the producer price index, a gauge of prices received by farms, factories and refineries, was smaller than December's downwardly revised 0.6% gain but above Wall Street forecasts for a 0.2% rise.
The core PPI, which excludes food and energy, rose 0.4% for the largest monthly gain since January 2005, the Labor Department said.
That was double economists' forecasts for a 0.2% gain, suggesting underlying inflation pressures were somewhat higher last month than financial markets had expected.
The Federal Reserve has increased short-term interest rates 14 times since June 2004 in a bid to head off the pressure of rising prices, and another rate hike is anticipated in March. The producer price index was up 5.7% from January 2005, driven mostly by a 25% surge in the price of finished energy goods.
However, core prices have increased just 1.5% in the last 12 months, suggesting energy price increases have not yet passed through to other goods.
Energy prices were flat in January. The cost of residential electricity soared a record 3%, while the price of residential natural gas climbed 0.8%. But those increases were offset by a 3.5% drop in the price of petrol and a 6.8% decline in liquefied petroleum gas. Food costs rose 0.2% after a hefty 0.8% gain in December.
The Labor Department said the price of passenger cars climbed 1.1%, while the price of light trucks was up 0.7% and civilian aircraft prices were 0.7% higher.
A separate report showed consumers were less optimistic in early February. The University of Michigan said its preliminary index of consumer sentiment in February fell to 87.4 from 91.2 in late January.
