U.S. Producer Price Growth Slightly Exceeds Estimates In January

(RTTNews) - Following yesterday's hotter than expected consumer price inflation data, the Labor Department released a report on Thursday showing U.S. producer prices also increased by slightly more than anticipated in the month of January.

The Labor Department said its producer price index for final demand rose by 0.4 percent in January after climbing by an upwardly revised 0.5 percent in December.

Economists had expected producer prices to rise by 0.3 percent compared to the 0.2 percent uptick originally reported for the previous month.

Meanwhile, the report said the annual rate of producer price growth in January was unchanged from an upwardly revised 3.5 percent in December.

The annual rate of producer price growth was expected to slow to 3.2 percent from the 3.3 percent originally reported for the previous month.

The bigger than expected monthly increase by producer prices partly reflected sharply higher food and energy prices, which shot up by 1.1 percent and 1.7 percent, respectively.

The report also said prices for services increased for the sixth straight month, rising by 0.3 percent in January after climbing by 0.5 percent in December.

The Labor Department said three-fourths of the advance by prices for services is attributable to prices for final demand services less trade, transportation, and warehousing, which rose 0.4 percent.

Prices for transportation and warehousing services also climbed by 0.6 percent, while prices for trade services inched up by 0.1 percent.

Excluding prices for food, energy and trade services, core producer prices rose by 0.3 percent in January after increasing by an upwardly revised 0.4 percent in December.

The annual rate of growth by core producer prices slowed to 3.4 percent in January from an upwardly revised 3.5 percent in the previous month.

"The PPI report doesn't tell the Fed much new," said Bill Adams, Chief Economist for Comerica Bank. "They are on hold near-term, and are likely though not assured to make a single rate cut in 2025 if prices with lots of momentum like housing and residential rents continue to cool and offset upward pressures on inflation from post-election changes to economic policy."

On Wednesday, the Labor Department released a separate report showing consumer prices in the U.S. increased by more than expected in the month of January.

The Labor Department said its consumer price index advanced by 0.5 percent in January after climbing by 0.4 percent in December. Economists had expected consumer prices to rise by 0.3 percent.

The report also said the annual rate of consumer price growth accelerated to 3.0 percent in January from 2.9 percent in December, while economists had expected the pace of growth to remain unchanged.

Excluding food and energy prices, core consumer prices rose by 0.4 percent in January after inching up by 0.2 percent in December. Core prices were expected to increase by 0.3 percent.

The annual rate of core consumer price growth also ticked up to 3.3 percent in January from 3.2 percent in December. Economists had expected the pace of growth to slow to 3.1 percent.