- U.S producer prices climb 0.5% in January versus 0.1% expected.
- The increase was largely attributed to higher service costs in the healthcare and hotel accommodation sectors.
- PPI registered a 2.1% gain (YoY) in January that marked the sharpest gain since last May.
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.