US Wholesale Prices Jump To 9.7% In January In Latest Sign Inflation Is Worsening

The U.S. economy's struggle with rising prices has grown into a steeper uphill battle after inflation more than doubled in the last month and skyrocketed by close to 10% in the last year.

On Tuesday, the Labor Department shared its most recent producer price index (PPI) data, which measures final-demand goods and services, and found that it rose by 1% in January, double the expected 0.5% forecasters were expecting and more than two times higher than the 0.4% seen in the prior month.

In a more worrying sign of just how dire the situation has grown, the data showed that wholesale goods prices are 9.7% higher than they were at the same time last year, slightly higher than the historic levels reached in late 2021.

Excluding food, energy and trade services, which make up the core PPI, there was an increase of 0.9% for the month, ahead of the 0.4% estimate and 6.9% higher on a year-by-year basis. Similar to other periods during the pandemic, goods prices outweighed those for services, rising 1.3% and 0.7%, respectively. Volatile food and energy prices moved higher, 2.5% and 1.6%, respectively.

Inflation has been something of a devil for the U.S. economy in the last year for consumers, businesses and policymakers. With the relaxation of COVID-related restrictions, business activity rebounded mightily, but created an explosion in demand far exceeding existing supply. All of this has been amplified by the failure to unwind strangled global supply chains and a nationwide labor shortage that only pushed prices higher.

These latest numbers will be important for the Federal Reserve to consider ahead of its next meeting in March. It is widely expected that the Fed will hike interest rates and put an end to its massive asset purchasing program that was launched to blunt the COVID-19 pandemic in March 2020.