The Bureau of Labor Statistics said that producer prices for final demand goods and services rose 0.4 percent in January, bouncing back after being unchanged in December. For manufacturers, producer prices for final demand goods jumped 0.7 percent in January, its fastest pace in two months. This was led by sharply higher energy costs, which were up 3.4 percent in January. This was largely consistent with recent observations in the spot price for West Texas intermediate (WTI) crude oil, which increased from an average of $57.88 in December to $63.70 in January, its highest monthly average since November 2014.
Meanwhile, food prices drifted lower for the second straight month, down 0.2 percent in January. On a year-over-year basis, final demand food and energy costs have risen 1.7 percent and 9.6 percent, respectively. Excluding food and energy, producer prices for final demand goods were up by 0.2 percent in this report, increasing for the sixth consecutive month.
Overall, producer prices for final demand goods and services have increased 2.6 percent since January 2017, decelerating for the second straight month from a 3.1 percent year-over-year pace in November. Nonetheless, prices have generally trended higher over the past year, up from 1.8 percent year-over-year in January 2017. Nonetheless, core producer prices—which exclude food, energy and trade services—continue to be modest at 2.4 percent, up from 2.2 percent in December but matching the rate seen in November. For comparison purposes, core producer prices were 1.7 percent year-over-year at this point last year.