U.S. wholesale prices came in hotter than expected in February.
The Labor Department reported Wednesday that its producer price index — which measures inflation before it hits consumers — rose 0.7% from January, and 3.4% from February 2025. The year-over-year increase was the most since February 2025.
The gains, driven partly by an sharp increase in food prices from January to February, were bigger than economists had forecast, and they occurred before the U.S. and Israel attack on Iran pushed energy prices sharply higher.
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Excluding volatile food and energy prices, so-called core wholesale prices rose 0.5% from January, down from a 0.8% gain the month before but more than twice what economists had forecast. Compared to a year earlier, core prices were up 3.9%, biggest jump since January 2025.
Food prices rose 2.4% from January, led by a 49% surge in vegetable prices and a 10% increase in fruit prices. Still, food prices were down from a year earlier.
The report comes as Federal Reserve policymakers meet in Washington to decide what to do with their benchmark interest rate. They cut it three times in 2025 but have since held off — and are expected to announce Wednesday that they’ve done so again. The Fed is waiting to see whether inflationary pressures ease and whether the slumping U.S. job market needs help from lower borrowing costs. The war with Iran has clouded the inflation picture by driving up energy prices.
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Last week, the government issued two reports showing that inflation at the consumer level remained above the Fed’s 2% target before the U.S. and Israel attacked on Iran.
The Labor Department reported a week ago that consumer prices rose 2.4% last month compared to February 2025. And the Commerce Department said Friday that the Fed’s favored inflation measure — the personal consumption expenditures (PCE) price index — was up 2.8% in January from a year earlier. Core PCE prices rose 3.1%, biggest increase in nearly two years.
