The producer price index, which measures inflation at the wholesale level before it reaches consumers, surged again in February.
The eye-popping reading – which marked the ninth consecutive month the gauge has been above 5% – has ramped up pressure on theto chart a more aggressive course in normalizing monetary policy. The central bank is almost certain to raise interest rates at the conclusion of its two-day, policy-setting meeting on Wednesday, with most economists penciling in a 25-basis-point hike as the start of a series of increases that could last for most of the year.
"We’re going to be led by the incoming data and the evolving outlook," he told reporters during the central bank's policy-setting meeting in January. Sky-high inflation is a global problem that has been driven by a faster-than-expected economic recovery from the pandemic, strong consumer demand, an influx of government stimulus and disruptions in the global supply chain. The war between Ukraine and Russia is also threatening to send global prices even higher as it impedes the world's access to energy supplies. Although oil prices dipped below $100 per barrel on Monday, gas prices in the U.S. remained above $4 a gallon.
"Next month’s report will include the geopolitical shocks from the Russian invasion of the U.S., so we expect volatility in the underlying data given the spikes in commodity prices," said Jeffrey Roach, chief economist for LPL Financial.
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