Wholesale Prices Soar 10% in February, Highest Level on Record

The Labor Department said Tuesday that its producer price index, which measures inflation at the wholesale level before it reaches consumers, surged 10% in February from the year-ago period. On a monthly basis, prices grew by 0.8% – a slight slowdown from January, when the gauge spiked by 1.2%.

Core inflation at the wholesale level, which excludes the more volatile measurements of food and energy, increased 0.2% for the month, following a 0.8% increase in January. Over the past 12 months, core prices were up 6.6%.

Gasoline prices, which soared 14.8% in the month, accounted for nearly 40% of the February increase. Overall, prices for goods jumped 2.4% last month, while prices for services remained the same.

The eye-popping reading – which marked the ninth consecutive month the gauge has been above 5% – has ramped up pressure on the Federal Reserve to chart a more aggressive course in normalizing monetary policy. The central bank is almost certain to raise interest rates at the conclusion of its two-day, policy-setting meeting on Wednesday, with most economists penciling in a 25-basis-point hike as the start of a series of increases that could last for most of the year.

Fed Chairman Jerome Powell has left open the possibility of a rate hike at every meeting this year and has refused to rule out a more aggressive, half-percentage-point rate hike, but he said it’s important to be “humble and nimble.”