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U.S. Producer Price Index Rises 0.6% During January

Editor's Note: Updating earlier story to include comment from economist, more details from report, updated gold prices.

(Kitco News) -The U.S. Producer Price Index for final demand rose by a seasonally adjusted 0.6% in January, the government said Tuesday.

Going into the report, consensus expectations compiled by most news organizations had been for a smaller rise 0.3% in the headline figure.

The inflation data suggest that “things were heating up in January,” said Royce Mendes of CIBC Economics.

“While energy prices were a major contributor, they weren't the whole story,” Mendes said. “Even after stripping out food and energy, the index was up 0.4%. That could raise market expectations for tomorrow's CPI (Consumer Price Index) print, although PPI is not generally good leading indicator of monthly changes in consumer prices.”

The market briefly dipped, then climbed nearly back to where it was after having risen overnight on a stronger U.S. dollar. As of 8:47 a.m. EST, April gold was up $8.90 to $1,234.70 an ounce. Three minutes prior to the PPI data, the contract had been at $1,235.50 an ounce.

On a year-on-year basis, PPI for final demand rose 1.6%.

Market participants monitor the data as a gauge for inflation at the wholesale level. Traders get the index for inflation at the consumer level on Wednesday, along with January retail sales.

By Allen Sykora of Kitco News; asykora@kitco.com

 

 

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