WASHINGTON (Reuters) -The prices of producers in the United States increased in January, as it provided more evidence that inflation was increasing again and strengthening the financial market views that the Federal Reserve would not reduce interest rates before the second half of the year.
The widespread rise in the productive inflation that the Ministry of Labor informed on Thursday followed the news on Wednesday that consumer prices accelerated in more than 1-1/2 years in January. However, some details of the report indicated a more moderate increase in January in the main inflation measures followed by the US Central Bank for a target of 2 %, which was expected in the wake of the strong consumer price index data.
Economists have warned that inflation was directed to the top, as President Donald Trump presses a wide tariff on imports as well as mass deportations that could cause a shortage of employment, increase wages and goods.
“The report gives a temporary stoppage to evaluate expectations, however, it is possible that the high costs of work will be translated into escalating pressure on consumer prices in the coming months,” said Court Rankin, chief economist at PNC Financial, said. “The definitions are still threatened by the Trump administration, which would raise the costs of companies in all fields.”
The Ministry of Labor Statistics Office (BLS) said that the product price index for the final demand increased by 0.4 % last month after an increase of 0.5 % in December. The economists of Reuters expected that the producers' price index would rise by 0.3 %.
In 12 months to January, the producers' price index advanced 3.5 % after increasing the same margin in December. With the PPI report in January, the BLS updated weights to reflect price movements in 2024, and the seasonal modification factors, the model used by the government to reduce seasonal fluctuations from data.
The rise in the product price index was through goods and services. Wholesale commodity prices jumped by 0.6 % after an increase of 0.5 % in December. More than half of the increase of 1.7 % jump came in energy commodity prices. Food prices increased by 1.1 %, with egg prices increased by 44.0 %, amid bird flu. With the exception of food and energy, the price of goods increased by 0.1 % for the second month in a row.
Services increased by 0.3 % after an increase of 0.5 % in December. An increase of 5.7 % in wholesale prices in hotel and motor rooms was more than a third of the increase in services.
There were also retail price increases, retail shipping, food, alcohol, jewelry, jewelry, shoes, retail accessories, and collected wired communications.
But the fuel margins and lubricants decreased by 9.8 %. Governor management fees increased by 0.4 %, while airlines prices decreased by 0.3 %. Doctors ’care rates decreased by 0.5 % and the cost of hospital care in the hospital decreased by 0.3 %. Hospital outpatient sponsorship rates fell 0.4 %.
Governor management fees, health care, hotel accommodations, motor and airlines prices are among the components that are included in the account of the Personal Consumption Expenditure Index (PCE), with the exception of food and energy, one of the measures followed by the Federal Reserve for Monetary Policy.
With CPI and PPI data on hand, economists estimated to increase the PCE price index in January from 0.2 % to 0.3 %. This was less than the gain of 0.4 % that most of it expected after the consumer price index data. Basic inflation increased by 0.2 % in December. It was expected to increase by 2.6 % year on year in January, a decrease from 2.7 % estimated after the consumer price index report. The annual basic inflation was 2.8 % in December.
“The Federal Reserve still announces that progress in returning inflation to its 2 % goal is still going on,” said Samuel Thompses, chief economist in macroeconomic economics.
The stocks rose in Wall Street, while investors focused on the expected inflation readings in Tame PCE. The dollar fell against the currency basket. US Treasury revenues fell.
The labor market is stable
Financial markets have prompted the expectations of reducing rates to September of September, although some economists believe that the window for further mitigating policy has been closed, noting the strong local demand and the stable labor market.
“We are close, but there is no inflation, adding” we want to continue to restrict politics at the present time. “
The Federal Reserve left the interest rate in the night stage unchanged in the range of 4.25 % -4.50 % in January, after it reduced it by 100 basis points since September, when it launched a policy dilution course. The policy rate was increased by 5.25 percentage points in 2022 and 2023 to tame inflation.
The Trump administration's financial, commercial and migration policies are inflation. A 25 % tariff was suspended on the goods from Canada and Mexico to March. But an additional tariff of 10 % on Chinese goods entered into force this month.
The stability of the labor market has been confirmed through a separate report on the Ministry of Labor, which clarifies the initial demands for unemployment benefits in the state, which decreased 7,000 to 213,000 seasons for the week ending on February 8.
Economists expected 215,000 claims for another week.
The claims have headed to a decrease so far this year, consistent with the demobilization of the historically low workers and help in supporting economic expansion. However, employment opportunities for those who lose their jobs are no longer abundant as they were a year or so, as companies adopt and see the situation. Non -agricultural salaries increased by 143,000 jobs in January, while the unemployment rate was 4.0 %.
The claim report showed that the number of people receiving benefits after a preliminary week of aid, an employee of employment, has decreased 36,000 to 1.850 million seasonal rates during the week ending February 1.
“The business sector remains in the waiting and vision situation to find out what may be, if any, for global supply chains because uncertainty in prices makes it difficult to expand operations,” said Ben Airez, senior economists throughout the country.
(I participated in the reports of Lucia Muttati; edited by Ceso Nymama and Andrea Richie)
