WASHINGTON – Wholesale costs for businesses climbed more sharply than anticipated in January, with companies appearing to transfer elevated import expenses to consumers, according to new federal data that hints at potential price increases ahead.
The Bureau of Labor Statistics reported Friday that wholesale prices jumped 0.5% during January, following a revised 0.4% climb in December. Financial analysts had predicted a smaller 0.3% rise for the month.
Service sector costs drove the overall increase, surging 0.8% largely due to a 2.5% rise in trade service margins – the profit margins earned by wholesale and retail businesses. Professional and commercial equipment wholesalers saw margins spike 14.4%, indicating companies are transferring tariff costs to customers.
Price increases also affected clothing and shoe retailers, chemical wholesalers, telecommunications services, health and beauty stores, and food and beverage retailers.
Over the full 12-month period ending in January, wholesale prices rose 2.9%, down slightly from December’s 3.0% annual increase. This slowdown occurred as higher prices from the previous year were no longer factored into yearly comparisons.
The government delayed releasing this data due to the recent federal shutdown. While producer goods costs dropped 0.3% – with energy falling 2.7% and food declining 1.5% – prices excluding these volatile categories jumped 0.7%.
These wholesale price measurements help calculate the Personal Consumption Expenditures index, which the Federal Reserve monitors for its 2% inflation target.
Before this report’s release, economists projected core consumer price inflation could reach 0.5% in January, potentially pushing the annual rate to 3.1%. December’s core inflation stood at 0.4% monthly and 3.0% yearly. The government plans to release the delayed consumer price report on March 13.
