Economic Report: Wholesale inflation tamer in February, PPI shows

Wholesale prices eased up in February, the latest sign that U.S. inflation remains under control.

The numbers: U.S. wholesale prices rose a mild 0.2% in February, the latest sign that inflation has throttled back after flaring up in early 2018.

Economists surveyed by MarketWatch had predicted a 0.1% increase last month following a sharp 0.4% advance in January.

The 12-month rate of wholesale inflation edged up to 2.8%, but it’s still below a recent peak of 3.1%.

What happened: The cost of services such as lodging, passenger flights and telecommunications rose in February to account for most of the increase in PPI. The wholesale price of services rose 0.3%.

Prices of wholesale goods fell 0.1%, however. The cost of energy and food both declined.

Wholesale inflation rose a stronger 0.4% in February if the volatile categories of energy, food and trade margins are stripped out.

The cost of partially finished goods and raw materials, meanwhile, rose sharply in February. These prices have risen about 5% in the past year, suggesting that inflation has stabilized at a somewhat higher level compared to a year earlier.

Big picture: Inflation in the U.S. has been the rise, but there’s no evidence it’s about to veer out of control. A string of lower readings in February have soothed investors after a scare in January that sent stock markets tumbling.

Still, the Federal Reserve is on track to raise interest rates later this month and it could it could become even more aggressive if inflation doesn’t level off. The central bank plans to wait for more information before altering its go-slow approach.

Market reaction: The Dow Jones Industrial Average DJIA, -0.68%  and the S&P 500 index SPX, -0.64% were set to open mildly higher in Wednesday trades. The dollar DXY, +0.08%  was little changed and Treasury yields were slightly lower.

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