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Labor Department: Wholesale prices rise more than expected in January

A worker moves pallets of soft drinks outside a beverage distribution company in New York on Jan. 29, 2024. (Angus Mordant/Bloomberg/Getty Images)

WASHINGTON (WISH) — The Labor Department said Friday that its producer price index jumped 0.3% in January from the previous month.

According to CNN, the producer price index (PPI) measures inflation on a wholesale level before it reaches consumers.

According to the report, price hikes among services providers drove the overall uptick in January, rising 0.6% for the month. Some of the biggest increases were in hospital care, traveler accommodation and portfolio management.

Reaction the report was swift.

Market Watch wrote, “The PPI report follows a disappointing increase in the consumer-price index in January. The rise in prices at the start of 2024 suggests inflation is not going to glide quickly or easily toward the Fed’s goal.”

CNBC wrote, “Just a few weeks ago, markets had been pricing in the first Fed rate cut in March. That since has been pared back to June as policymakers have expressed caution about giving up the inflation fight too quickly while noting that an otherwise stable economy buys them time before having to move.”

CNN quoted economist Chris Rupkey, of FwdBonds, in its coverage of the report: “Inflation is back, not in a big way, but it is also true that it is not going away and could yet wreak havoc on the broader economy where higher factory prices increase inflation at the consumer level.”

Despite coming in hotter than economists had expected — a projected 0.1% monthly increase and a 0.7% annual gain, according to FactSet — the annual increase was in line with what was seen during the last quarter of 2023. It was also the third-lowest rate notched since the pandemic’s upheaval of supply chains and remained well below the pre-pandemic average of 1.7%.

However, the monthly increase of 0.3% was the highest since August, data from the Bureau of Labor Statistics shows.