Wholesale prices accelerated again in January as strong consumer demand and pandemic-related supply-chain snarls continued to fuel the highest inflation in decades. The Labor Department is releasing the producer price index on Tuesday morning.
They gave a fresh look at just how hot inflation ran in January. Economists expect the gauge –which measures inflation at the Wholesale level before it reaches consumers – to show that prices surged 0.5% in January from the previous month. Consumers are paying more for everyday necessities, including groceries, gasoline and cars.
The central bank is widely expected to raise interest rates in March, but the inflation report could mean that policymakers pencil in a super-sized half-point hike. Hiking interest rates tends to create higher rates on consumers and business loans, which slows the economy by forcing them to cut back on spendingFed Chairman Jerome Powell has left open the possibility of a rate hike at every meeting this year and has refused to rule out a more aggressive, half-percentage point rate hike, but said it’s important to be “humble and nimble.”