U.S. January Inflation Persists at Elevated Levels, PPI Rebounds Above Expectations, Rate Cut Expectations Suppressed

BlockBeats News, February 27th. The U.S. Bureau of Labor Statistics released data showing that the Producer Price Index (PPI) for January rose by 0.5% on a monthly basis, higher than the market's expectation of 0.3% and also higher than December 2025's 0.4%; on a yearly basis, it rose by 2.9%, surpassing the expected 2.6%. The data indicates that upstream inflation pressure remains resilient.

Excluding food, energy, and trade services, the core PPI rose by 0.3% on a monthly basis, in line with expectations, but increased to 3.4% on a yearly basis, exceeding the market's expectation of 3%. Structurally, energy prices saw a slight decline, with wholesale gasoline prices dropping by 5.5% on a monthly basis and experiencing a 15.7% year-on-year decline; the rise in service wholesale prices and the expansion of retailer and wholesaler profit margins were the main driving factors.

Previously released data showed that the January Consumer Price Index (CPI) rose by 2.4% year-on-year, approaching the Federal Reserve's 2% target. However, the unexpectedly strong performance of the PPI has reinforced concerns about inflation stickiness, which may lead the Federal Reserve to remain cautious in its interest rate reduction path.

After the data was released, international spot gold prices saw a slight retreat from their highs, followed by a partial recovery of the decline. Market participants pointed out that certain components of the PPI (especially healthcare and financial services) will transmit to the Fed's more closely watched Personal Consumption Expenditures Price Index (PCE), and the subsequent data performance will be a key reference for interest rate expectations.