US wholesale prices remained high last month, a sign progress on inflation may have stalled

US wholesale inflation remained stubbornly elevated last month, another sign that even higher prices could be ahead for American shoppers.

The Producer Price Index, a measurement of average price changes seen by producers and manufacturers, rose 0.4% on a monthly basis and 3.5% for the 12 months ended in January. That held steady with December, which was upwardly revised to 3.5% according to Bureau of Labor Statistics data released Thursday.

PPI serves as a potential bellwether for retail-level inflation in the months ahead. On Wednesday, the latest Consumer Price Index came in hotter than expected.

The overall PPI index was driven higher by fast-rising food and energy prices, including a 10.4% jump in diesel fuel. Wholesale-level egg prices soared 44% in January, according to PPI data.

Egg prices have been on the rise amid a deadly bout of avian flu.

PPI is holding at its highest annual rate since February 2023.

Economists were expecting producer-level prices to slow on an annual basis, according to FactSet consensus estimates.

The stronger numbers seen in Thursday’s PPI will tend to translate into continued consumer price inflation through the middle of the year, Kurt Rankin, economist at PNC Financial Services Group, told CNN in an interview.

“One of the key indicators there is that energy prices continued to rise in January,” Rankin said, noting a 1.7% monthly increase in the PPI energy category. “That being the root of all costs, that’s going to affect every business — services side, goods side, transportation of goods to market, food to market, you name it.”

“That will affect all businesses in the coming months, and those costs indeed will be passed onto consumers through the subsequent months,” he added. “So the inflation story looks like it’s got some volatility ahead of it through the middle of the year.”

And, considering consumers appear to be shifting more of their spending to goods from services, that puts a bigger spotlight on interest rates, he said.

Interest rates have fallen in recent months, a reflection of the Federal Reserve’s cuts in the back part of last year; however, they’re likely to remain elevated: With inflation remaining stubbornly high, economists don’t expect the Fed to cut rates further anytime soon.

Excluding food and energy, core PPI slowed in January, easing to a 0.3% monthly gain versus 0.4% in December. On an annual basis, core PPI cooled to 3.6% from 3.7% the month prior.

Food and energy categories are typically quite volatile — and can be heavily influenced by temporary or one-time events such as weather, disease, war and supply chain hiccups — so economists and analysts look to core gauges to get a read on underlying inflation trends.

However, food and energy are two areas that people and businesses cannot avoid in their everyday lives. And increases on these fronts hit lower-income Americans the hardest.

“Inflation at the producer level remains high, and one concern is that this inflation could ultimately be passed along to consumers,” Elizabeth Renter, senior economist at NerdWallet, wrote Thursday.

“Thursday’s stronger-than-expected PPI helps to confirm, especially after Wednesday’s hot CPI, that inflation did indeed come roaring back in January, and makes the Federal Reserve’s path much clearer, since there is arguably zero reason to cut interest rates right now,” Paul Stanley, chief investment officer of Granite Bay Wealth Management, wrote in commentary on Thursday.