U.S. producer prices increased by the most since 2009 in January, according to a report released Wednesday by the Department of Labor.
The producer price index for final demand soared 1.3 percent, the biggest gain since the government changed the way the inflation metric is calculated in December 2009. Compared with a year ago, the PPI is up 1.7 percent.
Prices of services jumped 1.3 percent and were responsible for two-thirds of the January gain.
The cost of goods surged 1.4 percent after rising 1.0 percent in December.
Economists polled by Econoday had forecast the PPI would rise of just four-tenths of a percentage point.
The faster-than-expected rise in prices will fuel criticism of the Biden administration’s $1.9 trillion stimulus bill. Critics have warned that the bill risks pushing inflation too high.
Notable increase in US #RetailSales in January: Up 5.3% after 3 months of contraction.
This big data beat relative to consensus expectation, as well as a higher PPI move up, will fuel the ongoing debate on how much stimulus is too much stimulus.
With that, yields are higher again
— Mohamed A. El-Erian (@elerianm) February 17, 2021
In a separate report released Wednesday, the Commerce Department said retail sales rose by 5.3 percent in January, also far higher than expected.