U.S producer prices climb 0.5% in January versus 0.1% expected

The U.S Bureau of Labor Statistics revealed the producer prices index (PPI) report on Wednesday. The data suggested the sharpest increase in PPI in January in over a year. The increase was largely attributed to higher service costs in the healthcare and hotel accommodation sectors.

The Labor Department announced the U.S PPI to have climbed 0.5% in January that was recorded as the largest increase since October 2018. In December, PPI had noted a 0.2% jump. In a previous estimate, analysts had expected the index to gain 0.1% in January.

PPI Posted A 2.1% Gain On A Year Over Year Basis

On a year over year basis, the producer prices index registered a 2.1% gain in January that marked the sharpest gain since last May. Analysts had forecast a 1.6% gain in the index on a YoY basis last month.

Excluding volatile components like energy, food, and trade services, the increase in the PPI was printed at 0.4% in January versus 0.2% that was reported in December. This gain in core PPI was also branded the largest since last April. On a year over year basis, the U.S core PPI improved by 1.5% in January that matched the gain posted in December.

Wednesday’s data along with an improvement in consumer prices announced in the past week, saw economists anticipating a 0.2% gain in PCE (core personal consumption expenditures) price index in January that could potentially post the annual gain at 1.7%. The PCE price index noted a 1.6% increase (year over year) in December. Data for January is scheduled to be released on Friday.

Wholesale prices recorded a 0.7% decline in January versus a 1.5% increase in December. The drop was attributed to a 1.5% decline in gasoline prices that had accelerated by 4.2% in December. While good prices had seen a 0.3% increase in December, the gain was reported much lower at 0.1% in January.

EUR/USD Dropped Below 1.08 Level On Wednesday

Wholesale food prices were 0.2% up in January as compared to 0.3% decline last month. Core goods prices, on the other hand, rose 0.3% in January versus a 0.2% improvement posted in December.

The rebound in the cost of services was highlighted at 0.7% in January – the sharpest since October 2018. A 90% increase in January PPI was attributed to services with a 0.6% rebound in healthcare services cost declared on Wednesday.

The U.S dollar kept its strength in the forex market on Wednesday with EUR/USD last seen trading around 1.0785.