On Friday, the US Labor Department disclosed that producer prices experienced a higher than expected increase in the month of January. According to data, the producer price index for final demand increased by 0.3% in January, as opposed to a 0.1% decline seen in December. Economists had initially predicted a modest 0.1% rise.
This significant growth in producer prices can be largely attributed to a 0.6% rise in service prices, marking the highest increase since July. In a detailed breakdown, prices for services excluding trade, transportation, and warehousing surged by 0.8%, trade services grew by 0.2%, while transportation and warehousing services decreased by 0.4%.
In contrast, good prices dropped by 0.2% due to a drastic 1.7% fall in energy prices and a 0.3% decrease in food prices. However, excluding these factors along with trade services, core producer prices still rose by 0.6% in January from a 0.2% rise in December.
Although the annual growth rate of producer price slowed down from 1.0% in December to 0.9% in January, the deceleration was not as significant as economists' prediction of a drop to 0.6%. Meanwhile, the annual growth rate for core producer prices remained stable at 2.6% in January.
In a separate report, the Labor Department revealed that consumer prices in the US rose slightly higher than anticipated in January. The consumer price index grew by 0.3% in January, in comparison to a 0.2% rise in December, against economists' estimation of a 0.2% increase.
Interestingly, the annual rate of consumer price growth slowed down to 3.1% in January from 3.4% in December, which is still higher than economists' projection of a slowdown to 2.9%. Apart from food and energy prices, core consumer prices surged by 0.4% in January following a 0.3% increase in December, outpacing the expected 0.3% rise.
Finally, the annual rate of core consumer prices remained steady at 3.9% in January, against economists' prediction of a slowdown to 3.7%.
