The Producer Price Index (PPI) for final demand increased 0.7% in February, significantly outstripping the 0.3% consensus forecast.
On an annual basis, headline wholesale inflation rose to 3.4%, the highest level recorded since February 2025.
Bitcoin and major altcoins saw immediate selling pressure, with BTC dipping below $72,000 as traders recalibrated expectations for 2026 interest rate cuts.
Wholesale prices in the United States rose sharply in February, providing a clear signal that inflationary pressures are persisting across the economy even as the Federal Reserve prepares to conclude its latest policy meeting. The Bureau of Labor Statistics reported on Wednesday that the Producer Price Index (PPI) for final demand jumped 0.7% for the month, more than double the 0.3% increase expected by economists.
The data revealed that the annual headline inflation rate reached 3.4%, up from 2.9% in January. The surge was driven by broad-based gains in both goods and services. Goods prices led the monthly increase with a 1.1% jump, fueled by a 2.4% rise in food costs and a 2.3% spike in energy. Notably, fresh and dry vegetable prices skyrocketed 48.9%, accounting for a significant portion of the goods advance.
Core PPI, which strips out volatile food, energy, and trade services, also reflected a stubborn trend, rising 0.5% in February. This brought the year-over-year core reading to 3.9%, exceeding the 3.7% estimate. The persistent strength in these figures suggests that upstream costs could continue to filter through to consumer-facing metrics like the Consumer Price Index (CPI) in the coming months.
The report’s timing is particularly sensitive as the Federal Open Market Committee (FOMC) is scheduled to announce its interest rate decision later today. While the central bank is widely expected to maintain the federal funds rate in the 3.5% to 3.75% range, the hotter-than-expected data has prompted markets to reconsider the path of future cuts. CME FedWatch data now suggests a tightening window for policy easing, with some analysts pushing the first potential cut to September at the earliest.
“This isn’t the kind of PPI report the Fed wants to see,” said Oren Klachkin, economist at Nationwide Financial Markets. “This report suggests inflation was going to accelerate even before the Iranian conflict hit.”
The cryptocurrency market reacted swiftly to the news. Bitcoin (BTC), which had been trading near $73,000, dropped roughly 2.5% to reach lows around $71,305. Ethereum (ETH) and other major tokens followed suit, as the prospect of “higher-for-longer” interest rates typically weighs on risk assets. Market participants are now focused on Chair Jerome Powell’s afternoon press conference for clues on how the central bank will balance these rising costs against the economic uncertainty stemming from recent geopolitical shifts.
Disclaimer: This article is for informational purposes only and does not constitute advice of any kind. Readers should conduct their own research before making any decisions.
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