Wholesale Prices Stall in February, Easing Inflation Concerns Despite Tariff Worries

The Producer Price Index (PPI), which serves as an early indicator of inflation pressures in the supply chain, remained flat after January's upwardly revised 0.6% jump. This came as a welcome surprise to economists surveyed by Dow Jones who had anticipated a 0.3% increase. Even more encouraging, the core PPI, which excludes volatile food and energy categories, actually decreased by 0.1% — the first negative reading since July — against projections for a 0.3% rise. The core figure that also strips out trade services showed a modest 0.2% gain.

Financial markets reacted positively, with stock futures trimming losses following the report, though Treasury yields remained elevated.

This latest data arrives just one day after the Consumer Price Index rose 0.2% for February, placing headline inflation at 2.8% — slightly lower than January's figure and providing some reassurance during a period of market anxiety over President Trump's tariff policies.

On a year-over-year basis, headline producer prices increased 3.2%, exceeding the Federal Reserve's 2% target but down from January's 3.7% pace. Core PPI climbed 3.4% in February, a 0.4 percentage point decrease from the previous month. A 0.2% drop in services prices counterbalanced a 0.3% increase in goods prices. Notably, two-thirds of the goods price increase stemmed from a dramatic 53.6% surge in chicken egg prices, driven partly by avian flu outbreaks affecting supplies, though preliminary evidence suggests prices may have moderated in March as outbreaks slowed.

Markets are now virtually certain the Federal Reserve will maintain current rates at next Wednesday's policy meeting conclusion, with expectations for an initial rate cut in June followed by the equivalent of two more quarter-percentage-point reductions before year's end.