WASHINGTON — February brought an unexpected surge in wholesale inflation that caught economists off guard, according to new federal data released Wednesday.
The Department of Labor’s latest producer price index, which tracks inflation before it reaches everyday consumers, climbed 0.7% between January and February. Year-over-year, wholesale prices jumped 3.4% compared to February 2025, marking the steepest 12-month increase since February of last year.
These numbers exceeded what economic forecasters had anticipated and came before recent military actions between the U.S., Israel, and Iran sent energy costs soaring even higher.
When removing the unpredictable food and energy sectors, core wholesale inflation still increased 0.5% month-to-month. While this was lower than January’s 0.8% spike, it remained more than double economists’ expectations. Core prices climbed 3.9% annually, the largest year-over-year jump since January 2025.
Food costs drove much of February’s inflation surge, rising 2.4% in a single month. Vegetable prices skyrocketed 49% while fruit costs increased 10%. Despite the monthly spike, food prices remained lower than the previous year’s levels.
The inflation report arrives as Federal Reserve officials convene in Washington to determine their next move on benchmark interest rates. After reducing rates three times in 2025, the central bank has paused further cuts and is expected to maintain that position Wednesday. Fed leaders are monitoring whether inflationary pressures will subside and if the weakening job market requires stimulus through lower borrowing costs. The Iran conflict has complicated inflation forecasts by pushing energy prices upward.
Recent government data revealed consumer-level inflation remained above the Federal Reserve’s 2% goal even before the Iran military action began. Consumer prices increased 2.4% last month compared to February 2025, the Labor Department reported last week. Additionally, the Commerce Department announced Friday that the Fed’s preferred inflation gauge — the personal consumption expenditures index — rose 2.8% in January from the previous year. Core PCE prices climbed 3.1%, the largest increase in nearly two years.
