An underlying measure of US wholesale prices rose in January by the most since 2018, while the rate of new home construction fell from a 13-year high, data on Wednesday showed.
So-called core US producer prices, which strip out volatile components like food, energy and trade services, rose 0.5 per cent on a monthly basis — the strongest such increase since October 2018. On a year-on-year basis, core PPI rose 1.7 per cent. Both indices were ahead of economists’ expectations.
Meanwhile, headline producer prices jumped in January, rising 2.1 per cent year-on-year, the biggest increase since May, the Bureau of Labor Statistics said on Wednesday. That exceeded economists’ expectations for a 1.6 per cent increase.
The data come ahead of the release of minutes of the Federal Reserve’s January monetary policy meeting later on Wednesday. Fed officials were surprised by low inflation readings last year and have said they expect it to move closer to the central bank’s 2 per cent over the next few months.
A separate report on Wednesday showed the rate of new home construction in the US fell less than feared, as permits to build new homes jumped at the start of the year.
The housing market has emerged as a bright spot for the US economy after uncertainty around the US-China trade deal damped business investment last year and weighed on America’s industrial economy.
New housing starts fell 3.6 per cent month-on-month in January to a seasonally-adjusted annual rate of 1.567m last month — following an upward revision to the previous month’s data — better than economists’ expectations for a steeper 11.2 per cent drop.
Meanwhile, permits to build new homes, considered a leading indicator for home construction, jumped 9.2 per cent to a rate of 1.551m in January — the highest level since March 2007.