Suppliers’ price increases are expected to have decelerated slightly in February, though pandemic-related disruptions and strong consumer demand continue to stoke inflation.
Economists surveyed by The Wall Street Journal estimate the Labor Department on Tuesday will report the producer-price index, which generally reflects supply conditions in the economy, rose a seasonally adjusted 0.9% in February from the prior month, slowing from January’s 1% increase.
The index measures what suppliers are charging businesses and other customers. Economists are watching the numbers closely for signs that high inflation could be peaking.
They also forecast that the so-called core price index, which excludes the often-volatile categories of food and energy, climbed 0.6% in February from a month earlier, down from 0.8% in January. On a 12-month basis, the producer-price index was 9.7% in January, down slightly from 9.8% the prior month.
The consumer-price index rose to a new four-decade high of 7.9% in February, the Labor Department said last week, adding pressure on the Federal Reserve to speed up a series of interest-rate increases expected this spring in a bid to cool the economy and bring down inflation. The Fed likely will begin this process when it concludes a two-day policy meeting Wednesday.
The producer-price report generally captures pressure on input costs for producers. Though that doesn’t necessarily feed directly into prices of consumer products and services, it can reflect inflation building in the production pipeline.
Goods prices have driven producer inflation higher over much of the past year, fueled by Covid-19-related disruptions to supply. These include scrambled supply chains, reduced production due to virus outbreaks, higher transportation costs and widespread shortages of materials and labor.
Higher energy and commodity prices also have contributed. The energy component of the producer-price index leapt 2.5% in January from the prior month, compared with a median increase of 0.2% in the decade before the pandemic.
The Russian invasion of Ukraine has amplified the pressures in recent weeks, driving up prices for oil, wheat and precious metals.
A separate indicator of inflation pressure rose in February. Consumers’ median inflation expectation for one year from now increased to 6% in February, up from 5.8% in January and matching its November 2021 peak, according to a survey by the New York Fed released Monday. The median expectations for inflation three years from now also climbed, to 3.8%, up 0.3 percentage points but still down from its November peak of 4.2%.
Write to Gwynn Guilford at [email protected]
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