Wholesale prices likely to rise again in January as inflation accelerates

total price It is likely to accelerate again in January as strong consumer demand and supply chain hurdles linked to the pandemic continue to fuel the highest inflation rate in decades.

The Labor Department will release its Producer Price Index on Tuesday morning, providing fresh insight into how hot January inflation was. Economists We expect the metric – which measures wholesale inflation before it reaches consumers – that prices rose 0.5% in January from the previous month.

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That would be higher than in December, when prices rose just 0.2% from the previous month.

The surge in wholesale prices comes on the heels of a A separate report to the Ministry of Labor Released last week showed consumer prices rose 7.5% in January from a year earlier, the largest increase since February 982 when inflation hit 7.6%. Consumers pay more for daily necessities, including grocery shopAnd gasoline And cars.

The striking reading – marking the eighth consecutive month in which the scale was above 5% – is likely to put more pressure on the Federal Reserve To chart a bolder course in monetary policy normalization. The central bank is widely expected to raise interest rates in March, but a hotter-than-expected inflation report could mean policy makers are planning a massive half-point hike.

Raising interest rates tends to create higher rates on consumer and business loans, slowing the economy by forcing them to cut back on spending.

Mike Lowingart, managing director of investment strategy at e*commerce firm, said after the CPI report. “With views on these aspects scattered all over the map at this point, there is a lot the market needs to be uncertain about.”

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Fed Chair Jerome Powell has left open the possibility of a rate hike at every meeting this year and refused to rule out a more aggressive half-percentage point rate hike, but said it was important to be “modest and smart”.

“We will be led by incoming data and evolving expectations,” he told reporters during the central bank’s policy-setting meeting last month.

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