US wholesale prices picked up in February in sign that US inflation pressures remain elevated

WASHINGTON (AP) — Wholesale prices in the United States picked up again in February, the latest sign that inflation pressures remain elevated and might not cool in the coming months as fast as the Federal Reserve or the Biden administration would like.

The Labor Department said Thursday that its producer price index — which tracks inflation before it reaches consumers — rose 0.6% from January to February, up from a 0.3% rise the previous month. Measured year over year, producer prices rose by 1.6% in February.

The figures could present a challenge for the Fed, which is counting on cooling inflation as it considers when to cut its benchmark interest rate, now at a 23-year high. The Fed raised rates 11 times in 2022 and 2023 to fight high inflation. A rate cut by the Fed could boost the economy and financial markets because it would likely ease borrowing costs over time for mortgages, auto loans and business lending.

Thursday's data also showed that underlying inflation also picked up last month. Excluding volatile food and energy costs, “core” wholesale prices rose 0.3%, down from a 0.5% jump the previous month. Compared with a year ago, core prices climbed 2%, the same as the previous month. Core inflation, which tends to provide a better sign of where inflation may be headed, is watched particularly closely.

Persistently elevated inflation could become a threat to Biden's re-election bid, which is being bedeviled by Americans' generally gloomy view of the economy. Consumer inflation has plummeted from a peak of 9.1% in 2022 to 3.2%. Yet many Americans are exasperated that average prices remain about 20% higher than they were before the pandemic erupted four years ago.