January U.S. producer prices posted their biggest one-month gain since September, driven by final demand services and indicating lasting wholesale inflation pressures likely to factor into the Fed’s next monetary policy meeting on March 17-18.

The Bureau of Labor Statistics shared its monthly Producer Price Index report on Feb. 27 — measuring the change in selling prices by domestic producers for their output — which showed that January’s total PPI rose 0.5% month-over-month, following December’s 0.4% (revised down from 0.5%) and November’s 0.2%. Year-over-year, the PPI increased 2.9% after 3.0% increases in both December and November.

Economists had expected a January increase of 0.3% month-over-month and 2.6% year-over-year.

The Bureau showed that the January monthly increase was driven by a 0.8% advance in the index for final demand services, with 20% of that traced to a 14.4% jump in margins for professional and commercial equipment wholesalers.

MDM Analysis: That 14.4% margin spike likely indicates that professional and commercial equipment wholesalers had been absorbing higher costs tied to tariffs before passing them along.

Meanwhile, prices for final demand goods declined 0.3% month-to-month, with nearly 80% of it driven by a 5.5% drop in the index for gasoline.

Core PPI

The index for core goods — which excludes volatile food and energy — increased 0.8% in January after a 0.6% December gain and far ahead of analysts’ 0.3% expectation. Core PPI increased 3.6% annually for its highest rate in 10 months and topping analysts’ expectation of a 3.0% rise.