(Updated from 9:01 a.m. EST)
Producer prices rose significantly more than expected in January, the latest report of the
Producer Price Index shows.
The main number rose 1.1%, almost four times more than the 0.3% rise that was expected by economists polled by
. It is the largest gain in the index since Sept. 1990. Excluding the volatile food and energy sector, prices rose 0.7%, also far higher than the 0.1% increase that was predicted.
Economists weren't sure what to think about this number. Some said it looked like an aberration, but others worried that it could make further cuts to interest rates a lot harder. Most of Wall Street had thought that inflation concerns were basically on the back burner, but this number may indicate otherwise.
Key today, also, is the latest report of
industrial production, which shows that industrial output fell 0.3% in January. The measure was expected to remain unchanged from the previous month. Industrial production gauges the change in production in the nation's factories, mines and utilities. It has the tendency to influence the markets and will be scrutinized because of the problems that have been plaguing the manufacturing sector.
The PPI, as the report is known, is the market's broadest measure of wholesale inflation. It measures the prices paid by producers for raw materials and goods in various stages of completion. Generally, sharp increases in producer prices can be expected to be passed on to consumers, which shows up in the broad consumer inflation measure, the Consumer Price Index. The next CPI report is scheduled for release next Wednesay.
Until now, the PPI has remained subdued of late, especially when excluding energy prices that have risen sharply over the last year. Today's report was pushed higher, in part, by tobacco and energy prices.
Seperately, housing starts jumped 5.3% in January to 1.651 million. Economists had expected only 1.573 million.