That pace of price hikes was a little faster than economists had expected.
Over a one-month period, producer prices rose 0.8% in February, adjusted for seasonality, slightly below expectations and below the January level.
Where did the prices go up?
Most of the price increase in February came on the back of rising energy costs. Global oil prices rose at the end of February with Russia’s invasion of Ukraine. Since the beginning of the year, US oil prices have risen by about 30%.
Prices for products sold to other companies, such as spare parts, have also risen – mostly due to energy costs.
Thus, energy cost abstraction paints a more restrained picture of producer price inflation.
Without energy, food and commercial services, the producer price index rose 0.2% in February — notably lower than January and the lowest since November 2020 — and 6.6% over a 12-month period, also down from the start of the year.
However, the energy price crisis is not going away any time soon, as the geopolitical situation shows no signs of abating.
This means energy costs will rise for a longer period, which will lead to higher food prices.
“The conflict in Ukraine is expected to affect food prices globally during the spring, with Russia and Ukraine accounting for 14% of wheat production and 30% of global exports,” said Kurt Rankin, an economist at the Palestinian National Council.
Meanwhile, America is still dealing with supply chain issues.
“This supply and demand imbalance will continue to put upward pressure on food prices for producers, and therefore American households, in the coming months,” Rankin said.
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