US wholesale inflation in January far exceeded forecasts. What's in the markets?

Wholesale prices in January in the U.S. rose much faster than expected, writes CNBC. The core producer price index, which excludes volatile food and energy prices, rose a seasonally adjusted 0.8% last month, according to data from the U.S. Bureau of Labor Statistics. This was more than double the forecasts of economists, who expected to see this indicator at 0.3%, writes CNBC. In December, the core wholesale price inflation in the U.S. grew by 0.6%.

The overall (headline) PPI (reflecting the change in prices of goods and services at the stage of production and wholesale sales) rose by 0.5% in January, which was also above the forecast of 0.3% and outperformed the previous month (in December, the overall PPI growth was at 0.4%).

On an annualized basis, core wholesale prices accelerated 3.6%, while the overall index added 2.9%. Both indicators are significantly above the Fed's 2% inflation target and indicate that price pressures remain a significant factor for the U.S. economy, CNBC noted.

The main contribution to the growth of wholesale prices in the U.S. in January, according to a report from the Bureau of Labor Statistics, was the price of services, which increased by 0.8% for the month - the strongest increase since July 2025, writes CNBC. Higher margins in professional and commercial equipment wholesaling accounted for more than 20% of the sector's gain. In the goods segment, energy and food prices declined, while metals prices rose 4.8%. Prices in trade services jumped 2.5%, adding to the pressure on wholesale inflation.

Against this backdrop, the Dow Jones Industrial Average fell nearly 620 points, or 1.25%, in early trading on February 27, the S&P 500 declined 0.9%, and the technology index Nasdaq Composite fell more than 1%.

The US wholesale price inflation report was released amid US President Donald Trump's statements that "inflation is under control". However, price pressures at the early stages of the production chain, as reflected in the PPI data, may force the Fed to remain cautious when making interest rate decisions. Markets generally expect the regulator to maintain a pause in rate cuts until at least the summer, although Trump and White House officials are in favor of rate cuts, CNBC writes.

According to the FedWatch market sentiment monitoring tool, traders estimate the probability of interest rates remaining at current levels following the Fed's March 18 meeting at 96%.

- "Today's inflation data could give the Fed another reason to be patient about cutting rates and delay changes until the second half of the year," Bloomberg quoted Chris Zaccarelli of Northlight Asset Management as saying.

- "The Producer Price Index (PPI) doesn't usually get as much attention as the Consumer Price Index (CPI) or Personal Consumption Expenditures Price Index (PCE), but this morning it came in above expectations across all components, and that could alarm the markets," he also noted in a conversation with MarketWatch.

- "Markets aren't overreacting to PPI because if they were, the 10-year Treasury yield wouldn't be below 4%. In my opinion, markets are laying down the risk of a possible [U.S.] attack on Iran, and right now that outweighs everything else," said Jamie Cox, managing partner at Harris Financial Group. He is quoted by MarketWatch.

This article was AI-translated and verified by a human editor