Surge in wholesale prices is a warning
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A supermarket in Houston earlier this month. Photo: Ronaldo Schemidt/AFP via Getty Images
Wholesale prices — including for consumer staples like fresh vegetables — rose at a rapid clip in February.
Why it matters: It is a fresh warning for the Trump administration and the Federal Reserve. Price pressures were already building across the economy, even before the Iran war introduced new inflation risks.
By the numbers: The Producer Price Index — which measures prices that manufacturers, farmers and other producers receive for products — rose 0.7% last month, the Bureau of Labor Statistics said on Wednesday. That is the largest monthly advance since July 2025.
- PPI rose 3.4% in the 12 months through February, the highest annual rate in a year.
Driving the news: There is evidence of intensifying wholesale price pressures on both sides of the economy — goods and services — that could translate into even higher costs for consumers down the line.
Zoom in: Against the backdrop of consumer frustrations with higher costs, the surge in wholesale goods costs last month stands out: Prices increased more than 1%, the largest gain since 2023.
- Roughly 40% of that increase can be traced back to the gain in wholesale food prices, which rose 2.4%.
- Producer prices for fresh and dry vegetables soared almost 50% last month alone, the biggest monthly spike since 2010.
Friction point: Some Fed officials have shrugged off evidence of stickier inflation in goods prices in recent months, citing tariff-related effects that were likely to fade.
- But there is evidence that prices in the services sector are heating up, even as some Fed officials say inflation in that part of the economy has been well-behaved.
- Producer prices for services rose 0.5% last month. That's a slowdown from the 0.8% gain in January, but is still the third straight monthly increase after more benign readings at the end of 2025.
The bottom line: None of this accounts for the energy shock that is currently rippling across the economy — including in the form of higher costs for wholesalers that might ultimately get passed on to consumers.
