WASHINGTON, March 18, 2026, 10:01 EDT
Producer prices in the U.S. jumped more than forecasts in February, sending Wall Street lower at Wednesday’s open and leaving Fed officials with a headache just ahead of their rate call. The producer price index rose 0.7% month over month, 3.4% higher than last February. Bureau of Labor Statistics
This timing’s key: segments of the PPI roll into the personal consumption expenditures index, the inflation gauge the Fed tracks above all others. Ahead of the data, economists had pegged core PCE up 0.4% for February—marking three months running at that pace. The Fed drops its statement at 2:00 p.m. EDT, with Chair Jerome Powell on deck for remarks at 2:30 p.m. Reuters
Services drove over half the February gain, as traveler accommodation prices surged 5.7%. Goods climbed 1.1%, marking the strongest advance since August 2023, with food prices up 2.4% and energy higher by 2.3%. Fresh and dry vegetables soared—up 48.9%. Bureau of Labor Statistics
BLS data showed its core index, stripping out food, energy, and trade services, posted another 0.5% rise—ten months running now. According to AP, core producer prices minus food and energy also climbed 0.5% in the month, up 3.9% from a year ago, marking the sharpest annual gain since January 2025. Bureau of Labor Statistics
Pressure from earlier in the supply chain didn’t let up. The BLS reported a 1.6% jump in February prices for processed goods headed for intermediate demand. Unprocessed goods moved up 3.1%, and services tacked on 0.8%. Bureau of Labor Statistics
Investors weren’t impressed by the report. The Dow dropped roughly 79 points at the open, with the S&P 500 down 0.28% and the Nasdaq Composite shedding 0.26%. Yields pushed higher: the 10-year Treasury reached about 4.22%, and the two-year ticked up to 3.72%. Reuters
Moves rippled across industries: Delta Air Lines and American Airlines dropped over 1% apiece. Occidental Petroleum edged up, with Brent crude erasing losses and surging roughly 4%. Reuters
Art Hogan, chief market strategist at B. Riley Wealth, pointed out this is “the third PPI in a row that has come above expectations,” underlining the narrative that a Fed rate cut isn’t likely anytime soon. According to Reuters, traders have now moved the expected timing for the first fully priced quarter-point rate cut out to April 2027—previously, they had pegged it at December 2026 before the latest data landed. Reuters
James Bullard, the former St. Louis Fed chief, told CNBC—per MarketWatch—that the central bank needs to be “a little tougher on inflation.” He called February’s producer-price data a “hot report.” MarketWatch
“Some mighty big increases,” said Carl B. Weinberg, High Frequency Economics’ chief economist, reacting to the latest numbers. He flagged the risk that March may look even rougher, should higher energy prices persist. Oil is already up over 40% since the conflict with Iran flared in late February, according to Reuters. AP News
Even so, leaning too hard on a single month’s data can be misleading. February’s surge was driven in part by swingy food categories and pricier hotel stays, but AP noted that food prices actually remain lower than a year ago despite the recent pop. Economists speaking to Reuters are looking for March inflation figures to reflect more of the oil-driven uptick. Bureau of Labor Statistics
The Fed kept its target range locked at 3.5% to 3.75% back in January. Producer inflation keeps coming in hot, and oil’s been climbing—so Powell’s set to get grilled over how the Fed weighs stubborn pricing pressure with signs of cooling in the job market. Federal Reserve
