Producer Prices Rose 0.6% in January

The producer price index jumped 0.6% in January, the government said Tuesday, marking the largest advance since the fall of 2012. For the year, the measure rose only 1.6 percent, down a tenth from the result recorded in December. Economists had expected prices to increase by 0.3 percent. The expectation for higher inflation could trigger a more aggressive interest rates hike by the Federal Reserve to control the inflation. While rising demand and higher commodity costs are reviving price pressures in the production pipeline, renewed strength in the dollar may pose a headwind. Half of that pickup was due to a 12.9 percent surge in gasoline. The rise in producer prices comes as manufacturers are reporting paying more for raw materials.

Producer prices (PPI) rose 1.6 percent year over year in January versus a 1.6 percent rise in December.

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Margins for retailers also climbed sharply in January, though it's a volatile category that swings sharply from month to month and often skews the wholesale report. Transportation and warehousing services prices climbed 1.1 percent. Over the past 12 months wholesale costs have risen 1.6%, but as recently as one year ago they were basically negative.

Excluding food and energy, wholesale prices rose 0.4 percent from the previous month after a 0.1 percent rise. The increase was led by a 4.7% rise in the index for final demand energy.

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On Wednesday, the Labor Department is scheduled to release its more closely watched monthly report on consumer price inflation.

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