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The prices businesses pay to each other took a sharp turn higher in January, new data showed Friday, indicating that more tariff-related price increases could be still to come.

The Producer Price Index rose 0.5% last month, a pickup from December’s 0.4% rate, according to the latest data from the Bureau of Labor Statistics. The annual rate of inflation nudged down to 2.9% from 3%.

Economists were expecting wholesale inflation to increase by 0.3%, which would have resulted in a 2.6% annual rate.

US stocks moved sharply lower Friday morning, with investors fearing the hotter-than-expected inflation report could signal a recession. “Tariffs are being passed through along the supply chain,” Michael Reid, US economist at RBS Capital Markets, told CNN on Friday. “And so, our worry is that this is not the end of the pass through. We have not yet seen the full impact on consumer prices in the goods space.”

“These are all things that consumers pay for, directly or indirectly,” Reid said.

When excluding food and energy, the core PPI gauge (which provides a measure of the underlying inflation trend) picked up sharply. Prices rose 0.8% versus 0.6% in December to bring the annual rate to 3.6%, the highest in 10 months.

Other details in Friday’s report further corroborated the idea that President Donald Trump’s steep and sweeping tariffs continued to drive prices higher for US businesses, which in turn eventually leads to higher prices for consumers, Reid said.

https://www.cnn.com/2026/02/27/economy/us-ppi-wholesale-inflation-january