U.S. wholesale prices rise for the first time in 4 months

U.S. wholesale prices rise for the first time in 4 months

Wholesale prices in the U.S. rose in January for the first time in four months, reflecting higher costs for food and pharmaceuticals.

The producer-price index climbed 0.2 percent after a 0.3 percent drop in December, the Labor Department reported today in Washington. The median estimate in a Bloomberg survey of 74 economists projected a 0.3 percent increase. So-called core producer costs, which exclude volatile food and energy prices, also increased 0.2 percent.

While demand for commodities is starting to pick up, the global economy is still struggling to kick into a higher gear. Without stronger growth, raw-material costs may remain muted which leaves Federal Reserve policy makers room to maintain their record monetary stimulus.

“Inflation should be contained in the near-term,” said Christophe Barraud, an economist at Market Securities-Kyte Group in Paris. The second-best forecaster of wholesale prices in the past two years, according to data compiled by Bloomberg, said he doesn’t see “a rise in demand coming from the U.S. or Europe that would lead to much higher prices. Inflation is well below the Fed’s target, and that’s why the Fed is not worried today.”

Economists’ estimates for the price index ranged from a drop of 0.1 percent to a gain of 1.1 percent. Core prices were projected to climb 0.2 percent, the Bloomberg survey showed.

Source: Bloomberg