The producer price index (PPI) rose more than expected in January, confirming earlier concerns that inflation was running hot in the month, according to a report from the Bureau of Labor Statistics.
The PPI for final demand, which tracks inflation before it reaches consumers, increased by 0.3% in January, higher than economists’ expectations of 0.1%, rising by 0.9% year-over-year, according to the BLS. The report confirms concerns from investors that inflation ran higher than expected in January, after the consumer price index measured 3.1% year-over-year in the month compared to expectations of 2.9%, leading the Dow Jones Industrial Average to have the biggest single-day drop in nearly a year. (RELATED: EXCLUSIVE: Rampant Crime Is Increasingly Taking Its Toll On America’s Small Businesses, New Survey Reveals)
The higher-than-expected inflation report throws more cold water on investor hopes of a cut to the Federal Reserve’s federal funds rate, which is currently set to a range of 5.25% and 5.50%, the highest rate in 23 years. The federal funds rate has been set to its current position to combat high inflation under President Joe Biden, with the CPI peaking at 9.1% in June 2022.
The last trading session of the week has started, slightly in the red after today’s PPI reading came out 🚀🚀 pic.twitter.com/UTOTuxVgir
— Satoshi Flipper (@SatoshiFlipper) February 16, 2024
Following disappointing inflation data, more investors are projecting a “no landing” scenario where inflation does not return to the Fed’s 2% target but economic growth remains strong, as opposed to a “soft landing,” which would be a reduction in inflation without triggering a recession. Gross domestic product (GDP) has remained strong in recent months, rising 3.3% in the fourth quarter and 4.9% in the third quarter.
Consumers cut back on retail spending in January amid higher-than-expected inflation, declining 0.8% from December seasonally adjusted, threatening growth metrics in the first quarter due to consumer spending’s outsized portion of GDP growth.
The White House did not immediately respond to a request to comment from the Daily Caller News Foundation.
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