Inflation at the wholesale level in the United States rose more than expected in January, recording its largest gain in four years amid increases in the cost of energy products and some services, even though a strong U.S. dollar continued to keep underlying inflation tame.
Figures released by the U.S. Labor Department said on Tuesday its producer price index for final demand jumped 0.6% last month, the biggest hike since September 2012 and followed a 0.2% rise in December.
Despite the surge, the department found the PPI only increased 1.6% in the 12 months through January, following a similar gain in the 12 months through December.
Economists had forecast the PPI rising 0.3% last month and the year-on-year increase moderating to 1.5%. The rise in producer prices comes as manufacturers are reporting paying more for raw materials.
The gains largely reflect increases in the prices of commodities such as crude oil, which are being boosted by a steadily growing global economy. Oil prices have risen above $50.00 U.S. per barrel.
Moreover, the department said, wholesale food prices were unchanged after climbing 0.5% in December. Health care costs rose 0.2%. Those costs feed into the Fed's preferred inflation measure, the core personal consumption expenditures index.
The volatile trade services component, which measures changes in margins received by wholesalers and retailers, shot up 0.9% in January after being unchanged in the prior month.
