U.S. Producer Price Jumps in January

U.S. Producer Price picked up more than expected in January, boosted by rising cost of gasoline and some services. The Producer Price Index rose 0.6 percent in January, the largest gain since September 2012, a Labor Department report showed Tuesday. The PPI only increased 0.2 in December. Economists polled by Bloomberg had called for a 0.3 percent rise.

The recent pick up in wholesale prices is due to the increases in the prices of commodities such as crude oil. Oil price is trading above $50 per barrel this year.

Excluding food and energy, wholesale prices rose 0.4 percent in January. It followed only 0.1 percent in the prior month. The so-called core PPI climbed 1.6 percent in the 12 months through January, down from December’s 1.7 percent gain.

The underlying producer price pressures indicated that the inflation is moving to Fed’s target of 2 percent. The expectation for higher inflation could trigger a more aggressive interest rates hike by the Federal Reserve to control the inflation.

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