Wholesale prices rose significantly in February, another sign that inflation continues to creep in beyond rising energy costs.
The Producer Price Index, a measure of the pipeline costs producers receive for their products, rose a seasonally adjusted 0.7% month over month, the Bureau of Labor Statistics said Wednesday. The so-called core PPI, which excludes volatile food and energy costs, rose 0.5%.
Economists surveyed by Dow Jones had expected both indexes to rise 0.3%.
In the all-commodity index, prices outpaced the 0.5% pace of increase in January. However, the core rate of increase was lower than last month’s 0.8%.
On a 12-month basis, headline PPI inflation was 3.4%, the highest level since February 2025, and core inflation was 3.9%, according to the BLS. The Fed targets inflation at 2%.
Stock market futures fell on the news, but U.S. Treasury yields rose. Futures traders have delayed the Fed’s next rate cut until at least December.
The increase in PPI was primarily due to a 0.5% increase in service costs, which the Fed did not welcome. Policymakers believe that much of the recent rise in inflation is due to tariffs, and less so in the services sector. Portfolio management fees, the main driver of service costs in PPI measurements, rose 1% in February. Similarly, prices for securities brokerage, dealing, investment advice and related services rose by 4.2%.
Commodity prices rose 1.1% from the previous month.
Food prices rose 2.4% and energy prices rose 2.3%. In food, the index for fresh and dried vegetables jumped 48.9%.
The report suggests that pipeline inflationary pressures remain strong, especially in the services sector, complicating the Fed’s policy of considering how long to keep interest rates unchanged.
The report comes as inflation concerns accelerate amid fighting in the Middle East. The United States and Israel continue to attack Iranian targets, causing energy prices to soar. Oil prices are trading around $100 a barrel, and have risen more than 70% since the beginning of the year as the conflict progresses.
Previous inflation data do not reflect the rise in prices caused by the war. But it suggests that inflation was a problem even before the attacks. Consumer prices rose 2.4% in February, according to last week’s report. Separately, the Commerce Department announced that the main inflation measure the Fed uses as a forecasting tool is 3.1% core and 2.8% headline.
The Fed is expected to announce its latest interest rate decisions later Wednesday. Market participants believe the central bank will almost certainly vote to keep overnight policy rates unchanged in the range of 3.5% to 3.75%, where they have been since the last rate cut in December 2025.
