U.S. January inflation "high fever" persists, PPI rebounds unexpectedly, easing expectations are suppressed

GateUser-6433627c · 2026-02-27T14:13:49+00:00

In January, the US Producer Price Index (PPI) increased by 0.5% month-on-month and 2.9% year-on-year, surpassing expectations and indicating that upstream inflationary pressures remain strong. The core PPI rose to 3.4% year-on-year, also exceeding expectations. Although the CPI is close to the Federal Reserve's target, the stronger-than-expected PPI may cause the Fed to be more cautious about interest rate cuts. Some components of the PPI will influence future price indicators.

GateUser-6433627c

2026-02-27 14:13:49

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On February 27, the U.S. Bureau of Labor Statistics released data showing that the Producer Price Index (PPI) for January increased by 0.5% month-over-month, higher than the market expectation of 0.3% and also above December 2025’s 0.4%. Year-over-year, it rose by 2.9%, exceeding the expected 2.6%. The data indicates that upstream inflation pressures remain resilient.

Core PPI, which excludes food, energy, and trade services, rose by 0.3% month-over-month, in line with expectations, but increased to 3.4% year-over-year, higher than the market forecast of 3%. Structurally, energy prices have eased, with wholesale gasoline prices down 5.5% month-over-month and falling 15.7% year-over-year. The main drivers of the increase are rising service wholesale prices and expanding profit margins for retailers and wholesalers.

Previously released January CPI data showed a year-over-year increase of 2.4%, close to the Federal Reserve’s 2% target. However, the stronger-than-expected PPI reinforces concerns about persistent inflation, which may cause the Fed to remain cautious about cutting interest rates.

Following the data release, international spot gold prices slightly retreated from recent highs but later recovered some of the losses. Market participants note that certain components of the PPI (especially healthcare and financial services) will influence the PCE price index, which the Fed monitors more closely. Future data performance will be an important reference for interest rate expectations.

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