Producer prices index hints at inflation pressures

[marjar]

Like we didn't expect this?

WASHINGTON — U.S. core producer prices in January rose to their highest rate in more than two years, hinting at a build-up in inflation pressures as the recovery gathers pace, a potentially troubling development for the Federal Reserve.

A separate report from the Fed showed industrial production fell unexpectedly in January, largely because of a drop in utilities output as temperatures returned to normal following an unusually cold December.

The core producer price index, excluding food and energy, rose 0.5 percent, the biggest gain since October 2008, the Labor Department said on Wednesday.


The rise, which exceeded economists' expectations for a 0.2 percent gain, reflected a jump in pharmaceutical preparations, which accounted for 40 percent of the increase.

"The price increase might be a little troubling because it suggests that inflation is spreading across all raw materials," said James Meyer, chief investment officer at Tower Bridge Advisors in West Conshohocken, Pennsylvania.

"If you print money and have a stronger economy you're going to have some inflationary pressures."

The rise in core PPI comes at a time when a surge in commodity prices has caused most advanced economies to raise red flags on inflation.

www.msnbc.msn.com/id/41618636/ns/business-stocks_and_economy/

[ugonow]

Good thing I saved my WIN button.