Wholesale Prices Jump More Than Expected, Signaling Inflation’s Hangover

CNBC, Market Watch, Bloomberg, the Wall Street Journal, and CNN contributed to this report.

Businesses are paying more for goods and services, and that pinch is likely to trickle down to consumers. January’s wholesale price data, released Friday by the Bureau of Labor Statistics, showed prices climbing faster than economists expected—casting doubt on the idea that inflation is finally cooling.

The core producer price index (PPI), which strips out volatile food and energy costs, shot up 0.8% last month, following a 0.6% gain in December. That’s more than double what Wall Street had been betting on—just 0.3%. On the all-items front, the headline PPI rose 0.5%, also beating forecasts and nudging up from December’s 0.4%.

Looking at the year as a whole, core wholesale prices jumped 3.6%, while the overall index increased 2.9%. Both numbers sit well above the Federal Reserve’s 2% inflation target, suggesting price pressures remain alive and kicking in the US economy.

The bulk of the increase came from services, which jumped 0.8%—the largest monthly gain since July 2025. Goods prices, meanwhile, fell 0.3%, though core goods prices (excluding food and energy) climbed 0.7%.

Trade services, which track wholesale and retail profit margins, surged 2.5%. That’s a potential sign that businesses are starting to pass higher costs—including those linked to tariffs—down the supply chain. Michael Reid, a US economist at RBS Capital Markets, warned:

 “We haven’t seen the full impact on consumer prices yet.”

On the goods side, energy and food prices dropped, but metals jumped 4.8%. Within services, professional and commercial equipment margins accounted for more than 20% of the increase. Industries seeing the sharpest rises included apparel, footwear, chemicals, wired telecommunications, health and beauty products, and some food and alcohol.

The report arrives amid President Donald Trump’s insistence that inflation is under control. But the data suggest tariffs are still feeding price pressures. While the Supreme Court recently limited Trump’s ability to enforce certain tariffs, the president has other levers he can use, keeping the door open for more cost bumps.

Markets reacted swiftly. Investors worry the hotter-than-expected numbers could keep the Federal Reserve on the sidelines longer than hoped, delaying any rate cuts.

In short, the higher wholesale prices hint that consumers might feel the squeeze soon. If businesses pass along these rising costs, everyday goods and services could get pricier. Reid noted:

“We may not see a huge jump in consumer prices immediately, but margins are under pressure. If companies don’t raise prices, layoffs could follow instead.”

All of this underscores that the inflation story isn’t over. Even as gas and food prices fell last month, trade services and other categories point to more upward pressure in the pipeline.