Markets moved lower on Thursday after U.S. data showed an increase in prices at the wholesale level. Photo by John Angelillo/UPI | License Photo
Feb. 16 (UPI) -- U.S. wholesale prices increased by 0.7% in January, the largest gain since early last year, showing inflationary pressures remain entrenched in the world's leading economy.
The increase in the Producer Price Index, a measure of inflation at the wholesale level, followed a 0.3% rise in November and a 0.2% contraction in December.
Stripping out the more volatile items such as food, energy and trade services, the Commerce Department said Thursday that its index for final demand increased 0.6% last month, its largest increase since the 0.9% gain recorded in March 2022.
The cost for raw materials, meanwhile, declined by 5% last month, the fourth such decline in five months. Much of the increase in costs in January was attributed to energy.
The price for Brent crude oil, the global benchmark for the price of oil, peaked last month at $88.19 per barrel but has been more or less range-bound for much of February, holding at around $85 per barrel at the start of trading on Thursday.
The Commerce Department added that the price for everything from residential natural gas, diesel and jet fuel all increased last month, though wholesale prices for fresh and dry vegetables posted a 33.5% decline.
Despite the sliver of hope in the price for vegetables, consumer-level inflation is showing little sign of slowing down. Prices between December and January increased by 0.5% and annual inflation is at 6.4%, a downtick of just 0.1% from the previous month-on-month reading.
Shelter costs for consumers accounted for nearly half of the increase at 0.7% for the month and 7.9% annually. Energy costs were up 2% and 8.7%, respectively, while food costs rose by 0.5% from December and 10.1% year-on-year.
With jobs also coming in strong, the U.S. Federal Reserve may have some work yet to do to dampen inflation. Federal Reserve Chairman Jerome Powell said there's been progress -- consumer-level inflation is down from 9.1% last year -- but the fight is far from over.
"It's not going to be, we don't think, smooth," he said on the economic road ahead. "It's going to be bumpy."
Markets were lower early Thursday amid fears the Fed may have to be more aggressive with future rate hikes. The Dow, S&P 500 and NASDAQ were all off more than 1% at the start of the trading day.
The Federal Reserve releases minutes from its most recent meeting next week.