PPI, Business Inventories Both Rise
That report was released just as another government report showed an increase in business inventories during January.
The producer price index, compiled and released by the Labor Department, rose 1% in February after a 1.6% increase in January.
The “core” PPI, which excluded energy and food prices, fell 0.5% during the month as prices for clothing, computers and vehicles plunged. The increase was due mostly to energy prices, the report said.
Analysts told Bloomberg that higher energy prices can hurt the economy by slashing profits and reducing the discretionary income of consumers and businesses, stunting investment.
Weak demand for other goods is forcing companies to absorb higher energy prices, Bloomberg said.
Inventories at U.S. businesses rose 0.2% in January, the Commerce Department reported to a seasonally adjusted $1.147 trillion. The report revised the figures from December to an increase of 0.7%.
Business sales rose 1.2% in December, Commerce said. The increase in sales forced the inventory-to-sales ratio down to 1.36 months, the report said.
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