US Producer Prices Surge Amid Tariff Pressures

In January, U.S. producer prices rose significantly, driven by tariff-related cost increases and wider margins in various sectors. This spike has strengthened economists' beliefs that the Federal Reserve will maintain interest rates until at least June. Notable increases were seen in services and core goods prices.

In January, U.S. producer prices experienced an unexpected rise, marking the most significant acceleration in over three years. This increase, reported by the Labor Department, is attributed to businesses passing on tariff costs and raises anticipation of a Federal Reserve status quo on interest rates until June.

Key contributors to this surge include wider margins in professional equipment and retail sectors. Core inflation components, excluding food and energy, rose substantially, with economists projecting further consumer cost impacts in the coming months. Services prices notably jumped, propelled by a substantial rise in trade services.

The news sparked a dip in the stock market, with currency and treasury yields mostly dropping. Despite some tariff rollbacks, the Trump administration imposed temporary global tariffs, affecting prices across sectors like transportation and healthcare, while some goods like gasoline and fresh fruits saw price declines.

(With inputs from agencies.)