U.S. Producer prices climbed 0.1% in February as higher energy prices weighed into the increase for the second consecutive month, according to a Labor Department report released Tuesday.
However, the increase was less than expected, with analysts forecasting a 0.4% rise in the government’s Producer Price Index (PPI), which measures prices at the factory door and inflation pressures before they reach the consumer.
"There’s just a huge amount of slack now in the U.S. economy and the global economy" that’s keeping prices down, said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida. "That’s going to hang around for some time."
The PPI rose 0.8% in January, which was the first increase since August 2008.
Energy price increases slowed but were up 1.3% in February. Energy costs first switched directions in January, rising 3.7 percent compared to the 9.1 decline in December after plummeting 12.4% in November and 12.8% in October — which set a 22-year record.
In other numbers, February crude goods declined 4.5% following a 2.9% drop in January while food prices fell 1.6% versus a 0.4% decline in the first month of the year.
The core PPI, which excludes volatile food and energy costs, advanced 0.2% following a 0.4% rise a month earlier.
The Labor Department’s Consumer Price Index (CPI) for February is scheduled for release Wednesday at 8:30 AM ET. The CPI measures inflation pressures at the consumer level. Economists are expecting consumer prices to rise the same 0.3% in January with core consumer prices up 0.1%.