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US Producer Prices Rise More Than Expected in January

The US producer-price index (PPI) rose 0.4% in January, exceeding economist expectations of a 0.3% increase. This follows a 0.5% gain in December, signaling persistent inflationary pressures in the economy.

Over the past 12 months, producer prices have climbed 3.5%, with a faster annualized pace of 4.6% over the last three months. The data suggests that inflation remains stubborn despite the Federal Reserve’s efforts to stabilize prices.

The PPI serves as an early indicator of price trends in the economy, reflecting how companies set prices for goods and services. It is also a key input for the Fed’s preferred inflation gauge, the personal-consumption-expenditures (PCE) price index. In December, PCE inflation was running at 2.6%, still above the Fed’s 2% target.

Investors and policymakers will closely watch the upcoming January PCE report for further clues on inflation trends. With both CPI and PPI data in hand, analysts expect a clearer forecast for the Fed’s next policy move.

The latest inflation readings could influence market expectations on the timing of interest rate cuts, with the Fed likely to remain cautious before making any policy adjustments.

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