February Producer Price Growth Hits 7-Month High as Iran War Effects Loom

11:30 AM EDT, 03/18/2026 (MT Newswires) -- US producer prices rose at the fastest pace in seven months in February amid notable spikes in wholesale costs of food and energy, as markets braced for higher inflation prints due to the ongoing Iran war.

The producer price index increased 0.7% on a seasonally adjusted basis, accelerating from a 0.5% rise in January and representing the biggest gain since July, Bureau of Labor Statistics data showed. A survey compiled by Bloomberg pointed to a gain of 0.3%.

More than half of the February rise in wholesale prices is attributable to a 0.5% advance in services, the BLS said, even as services growth marked a deceleration from 0.8% in January.

Prices for final demand goods rose 1.1% in February, the fastest since August 2023, following 0.2% drop the month prior. Within goods, both food and energy prices turned positive, at 2.4% and 2.3%, respectively.

Crude prices have surged since the US and Israel attacked Iran at the end of February as the crucial Strait of Hormuz remains effectively closed, disrupting supplies.

"The spike in global oil prices in March means food and energy goods, along with transportation services, will likely see larger price increases in the next PPI report," Grace Zwemmer, US economist at Oxford Economics, said in remarks e-mailed to MT Newswires.

"Recent tariff policy changes have increased the odds of more trade volatility in 2026," which could keep trade services prices elevated, Zwemmer said.

Annually, wholesale cost growth accelerated to 3.4% in February, the largest gain in 12 months, from the previous month's rise of 2.9%. The consensus was for a 3% increase.

The PPI report follows official data released last week showing annual consumer inflation in the US held steady in February.

The Fed is due to announce its monetary policy decision at 2 pm ET on Wednesday, with Chair Jerome Powell scheduled to hold a press conference at 2:30 pm. Markets widely expect the central bank to keep its benchmark lending rate unchanged for a second consecutive meeting, according to the CME FedWatch tool.

The Fed is also scheduled to publish its Summary of Economic Projections document, which includes the so-called "dot plot" that outlines individual members' expectations regarding monetary policy.

In a note e-mailed Tuesday, Macquarie Group said the dot plot may signal no interest rate cut this year amid inflationary pressures that are likely to intensify due to the ongoing Iran war. On the other hand, UBS Securities expects the Fed to continue to signal one rate cut in 2026.

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