Wholesale prices surged in February at the fastest monthly pace in more than half a year, delivering fresh evidence of building inflation pressures just before the Iran conflict added new risks to the economy.
The Producer Price Index (PPI) climbed 0.7% last month, the largest gain since July 2025, the Bureau of Labor Statistics reported Wednesday. Over the past year, wholesale prices rose 3.4%, the highest annual rate in 12 months.
The increase affected both goods and services, indicating higher costs that could eventually be passed on to consumers. Wholesale goods prices jumped more than 1%, the biggest monthly rise since 2023, with roughly 40% of that gain coming from food prices that advanced 2.4%. Prices for fresh and dry vegetables alone soared nearly 50%, the steepest monthly spike since 2010.
Services prices rose 0.5% for the third straight month, even after a slight slowdown from January.
Stocks tumbled on Wall Street on Wednesday after the PPI reading. The Dow Jones Industrial Average fell 418 points, or 0.9%. The S&P 500 and Nasdaq Composite each dropped 0.7%, CNBC reported.
Traders were also awaiting the Federal Reserve’s interest-rate decision later in the day, with markets pricing in no change from the current 3.5%-3.75% range.
“The hotter than expected number is specific to tariffs,” Todd Schoenberger, CIO at CrossCheck Management, said, per CNBC. “This is structural inflation, not temporary, and is likely going to impact monetary policy deep into the third quarter.”
“Add in the hotter energy prices we’ve seen since the Iran War began, which have yet to show in these reports, and Wall Street is bracing for rapidly rising prices that will clearly flow down to the consumer level,” he stated.
Oil prices climbed further on Wednesday. West Texas Intermediate futures rose more than 2% to $98 per barrel, while Brent crude gained more than 5% to $109 a barrel.
The producer-price figures showed inflation was already heating up before the conflict. More than half of the monthly PPI gain stemmed from a 0.5% increase in services costs, including traveler accommodation, food wholesaling, and investment services.
An underlying gauge excluding food and energy rose 0.5%. Goods prices advanced 1.1%, and processed goods for intermediate demand jumped 1.6% — the largest increase since August 2023.
“The large upside surprise to the PPI in February confirms that stronger inflationary pressures were already making their way through supply chains even prior to the surge in oil prices,” Thomas Ryan, North America economist at Capital Economics, said in a note, Bloomberg reported.
Fed officials, expected to hold rates steady, are now watching how the oil shock ripples through the economy. Some had downplayed recent stickiness in goods prices as temporary tariff effects, but service costs have continued to climb.
“February’s PPI came in hot as companies grapple with increased distribution and input costs,” Bloomberg Economics economist Troy Durie said. “We expect February [Personal Consumption Expenditures] — due April 9 — to also come in hot, but inputs from the PPI likely won’t be the main culprits.”
The report does not yet reflect the full energy shock now moving through supply chains. President Donald Trump waived the Jones Act for 60 days to help stabilize oil markets amid tensions that include Iranian threats to facilities in Saudi Arabia, the United Arab Emirates, and Qatar.
