US producer prices rise past forecasts in February

Factory gate inflation continued to move higher in the US during February, as labour markets continued to tighten amid a broadly stable US dollar and commodity markets.

Producer prices in the States advanced by 0.3% month-on-month last month (consensus: 0.1%), alongside a 0.6% jump for energy costs, while food prices were 0.3% ahead, according to the Bureau of Labor Statistics.

Food prices were flat in January month-on-month and energy costs higher by 4.7%.

In comparison to a year ago, producer prices were 2.2% higher (consensus: 1.9%), compared to a 1.6% rate of advance in January.

At the so-called 'core' level, prices gained 0.3% on the month and were up by 1.8% on the year, versus a rise of 1.6% in the month before.

"Excluding food, energy, and trade services, core PPI personal consumption inflation was up 0.4% m/m, pulling the y/y increase higher to 2.4% and erasing much of the remaining gap that had formed between the PPI measure and the CPI measure of inflation.

"The improvement in PPI this month is broadly consistent with our view that inflation pressures are continuing to build in the US economy. With labor markets continuing to tighten, and the dollar and commodity prices broadly stable, we see inflation firming this year and next. We will receive a more comprehensive read on domestic price pressures tomorrow with the release of CPI," said Rob Martin at Barclays Research.