U.S. producer prices rose only marginally in February, adding to evidence of a subdued start to the year for the economy.
The Labor Department said its producer price index (PPI) increased 0.1% last month, while the core PPI, which excludes food and energy costs, also rose 0.1%.
In the 12 months through February, prices rose 1.9% and 2.5%, respectively.
Coupled with Tuesday’s equally benign report on consumer prices, the data indicated little need for the Federal Reserve to shift its most recent guidance on interest rates, which said it would “be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate.”
The Fed watches this data because higher costs for producers often lead to them passing that cost on to consumers.
No noticeable moves were seen in the dollar, yields on the benchmark 10-year U.S. Treasury bond or S&P 500 futures in reaction to the release.
Markets are skeptical that the Fed could move forward with a rate hike this year, particularly after the employment report showed weak job creation in February.
Fed fund futures reflect no expectations for any such move and indicate a nearly-20% probability that the next move will, in fact, be a cut.