(Daily Caller News Foundation) — The producer price index (PPI) rose more than double expectations in February as inflation continues to run hot despite anticipation of an interest rate cut from the Federal Reserve, according to a report from the Bureau of Labor Statistics (BLS).
The PPI for final demand, which tracks inflation before it reaches consumers, increased by 0.6% in February, far higher than economists’ expectations of 0.3%, and increased 1.6% year-over-year, according to the BLS. The consumer price index for February also came in slightly above expectations at 3.2% year-over-year, rising 0.4% for the month, raising concerns among investors that inflation is not trending toward the Fed’s target of 2%.
Almost two-thirds of the monthly increase in PPI was in the index for final demand goods, which increased 1.2% just in the month, while final demand for services slid up 0.3%, according to the BLS. Final demand less foods, energy and trade services rose 2.8% year-over-year.
February PPI #inflation +1.6% year/year vs. +1.2% est. & +1% prior; core PPI +2% vs. +1.9% est. & +2% in prior month pic.twitter.com/u2EZ3u7hpN
— Liz Ann Sonders (@LizAnnSonders) March 14, 2024
Persistent elevated inflation continues to dampen investor hopes that the Fed will cut its federal funds rate down from a range of 5.25% and 5.50%, the highest point in 23 years. At the end of January, investors were betting the most likely scenario would be a rate cut in March, but that has since been moved back to June as the CPI fails to decelerate below 3% year-over-year, according to the CME Group.
High inflation has continued to weigh on both consumers and companies, with discount variety store Dollar Tree announcing that it will be closing around 1,000 stores over the next few years in part due to product cost inflation. Consumers have increasingly been using debt to finance their purchases, with credit card debt reaching an all-time high of $1.129 trillion in the fourth quarter of 2023.
The White House did not immediately respond to a request to comment from the Daily Caller News Foundation.
