US January PPI Surges Hotter Than Expected, Stoking Inflation Concerns

Released February 27, the US Producer Price Index (PPI) for final demand rose 0.5% month over month in January 2026, significantly surpassing the consensus estimate of +0.3% and accelerating from the corrected previous value of +0.4%. PPI jumped to +2.9% on an annual basis, exceeding predictions of +2.6% (previous +3.0%). The hotter print highlights continuous wholesale-level price pressures beginning in 2026.

Core final demand (excluding foods, energy, and trade services) increased 0.3% m/m, in line with forecasts (prior +0.6%), but core ex-food/energy index posted a +3.4% year-over-year rise over the past 12 months, hence indicating moderating but still high core PPI metrics. Services drove most of the growth (+0.8%); trade services margins soared +2.5%; and transportation increased +1.0%; goods costs fell -0.3%, fueled by a -2.7% drop in energy (especially gasoline -5.5%). Notable increases were in professional equipment wholesaling (+14.4%).

The higher-than-expected PPI release indicates sticky underlying inflation at the producer level, which calls into question the speed and timing of Federal Reserve interest rate cuts in 2026. Markets responded quickly: The US dollar strengthened right after Treasury bonds sold off and yields increased. As the next PPI report (for February) delayed to March 18 owing to government shutdown effects, attention now pivots to upcoming PCE data, where monthly readings might come in at +0.25–0.35%, further complicating the inflation forecast.