Upstream Heat

US Producer Prices Pop Up

The Producer Price Index (PPI) in the US for final demand, basically inflation before it hits store shelves, rose 0.7% in February. That’s faster than January (+0.5%) and December (+0.4%).

On a 12‑month basis, final demand prices are up 3.4%, the largest annual gain since February 2025.

Beginner translation: Businesses are paying more across the supply chain, and that can eventually show up in consumer prices, unless companies absorb the costs.

Core PPI Keeps Climbing

Strip out the noisy stuff (food, energy, and trade margins), and “core” PPI still rose 0.5% in February, its 10th straight monthly increase.

Over the past year, core prices are up 3.5%.

Think of this like the “stickiness check”, if it stays elevated, inflation pressure looks more broad based, not just commodity noise.

Services Did a Lot of the Heavy Lifting

Final demand services rose 0.5% in February, the third straight increase. The biggest push came from services less trade, transportation, and warehousing (+0.6%), with trade services up 0.4% and transportation/warehousing up 0.5%. 

A standout mover was traveler accommodation services (+5.7%). Services inflation tends to be harder to cool, because it’s tied to ongoing operating costs.

Goods Prices Spike as Food and Energy Flare

Final demand goods rose 1.1% in February (largest since Aug 2023). Foods jumped 2.4%, energy rose 2.3%, and core goods (less food/energy) increased 0.3%. A huge driver: fresh & dry vegetables (+48.9%).

Watch whether next month’s pressure fades (food spikes often do) or spreads into core goods.