U.S. producer prices rose sharply in February, exceeding expectations and pointing to persistent inflation pressures driven largely by the services sector.
The Producer Price Index for final demand climbed 0.7% last month, following January’s unrevised 0.5% increase, according to the Labor Department.
Economists had forecast a more modest 0.3% rise, highlighting the stronger-than-expected inflationary momentum across the economy.
A surge in oil prices, fueled by escalating Middle East conflict, has intensified cost pressures, with crude prices rising more than 40% since late February.
Analysts expect the inflationary impact of higher energy costs to become more visible in upcoming March consumer and producer price reports.
The Federal Reserve is widely expected to keep interest rates unchanged, while updating projections that may reflect higher inflation forecasts.
Markets now anticipate only one rate cut this year, as policymakers remain cautious amid resilient price growth and ongoing geopolitical risks.
On an annual basis, producer prices increased 3.4% in February, reinforcing concerns that inflation could remain above the Fed’s 2% target longer than expected.
