Investing.com - U.S. producer prices rose at a slower-than-anticipated annualized rate in February, while the measure was unexpectedly unchanged month-on-month, according to data that will likely factor in to how the Federal Reserve views inflation during a time of increased uncertainty around President Donald Trump’s trade policy.
The headline producer price index (PPI) for final demand came in at 3.2% in the twelve months to February, easing from an upwardly-revised rate of 3.7% in January. On a monthly basis, the gauge cooled to 0.0% from 0.6%.
Economists had expected readings of 3.3% and 0.3%, respectively.
In a note to clients, Thomas Ryan, North American Economist at Capital Economics, flagged that the unchanged monthly PPI figure was largely due to a fall in final demand services prices that helped offset an uptick in final demand goods costs driven by surging egg prices.
The report comes after a separate metric on Wednesday showed that consumer prices increased at a tamer-than-projected pace last month, possibly presenting an upbeat piece of news for Trump as he pushes ahead with his plans to overhaul the U.S. trading relationship with friends and adversaries alike.
Hopes that the Federal Reserve will slash interest rates later this year were also buoyed, with financial markets now betting that the central bank will slash borrowing costs as soon as June following its decision to push pause on a cycle of rate cuts in January. At its upcoming meeting next week, the Fed is tipped to leave its benchmark overnight interest rates steady at 4.25% to 4.50%.
However, analysts remained concerned that the strife around Trump’s tariffs could still drive up inflationary pressures in the coming months and, in turn, threaten broader growth.
Ryan added that most increases in the February PPI were "slightly hotter than we had assumed prior to the data" in the components that are relevant for the personal consumption expenditures (PCE) price index, excluding food and energy -- a gauge closely-monitored by the Fed.
Elsewhere, the number of Americans filing for first-time unemployment benefits dipped slightly to 220,000 in the week ended on March 8, compared to a prior reading of 222,000. The figure had been tipped to rise to 226,000.
It was the latest sign of potential reslience in the U.S. labor market, with data on Friday also showing a pick up in job growth in February.
Fed Chair Jerome Powell has said the U.S. economy "continues to be in a good place," citing an ongoing -- albeit bumpy -- fall in inflation and expansion in labor demand. Powell has also noted that a "solid" 191,000 jobs have been added on average since September.