US wholesale inflation was hotter than expected in February on a services cost boost, official data showed on Wednesday, in an indication of producer prices before the start of the war in the Middle East.

The Producer Price Index (PPI) rose by 0.7 percent on a month-on-month basis, said the Labor Department. Analysts had expected a cooler 0.3 percent increase.

Compared to the same period a year ago, PPI was up by 3.4 percent – the biggest 12-month advance since February 2025 – the report said.

US-Israeli strikes on Iran on February 28, which killed its supreme leader Ayatollah Ali Khamenei, have triggered a war that spread across the Middle East.

Tehran's retaliation has brought commercial shipping through the Strait of Hormuz to a virtual halt, and energy prices have rocketed.

Around a fifth of global crude oil and liquefied natural gas pass through the waterway in peacetime.

The cost hikes have fuelled fears that steeper prices would filter through the world's biggest economy and push up consumer inflation.

On Wednesday, more than half of February's advance was attributed to a 0.5-percent rise in services costs.

The increase was "broad-based," the department said, and only partially linked to trade, transportation and warehousing prices.

The majority of the uptick can be traced to other segments, such as traveller accommodation services. Other areas of increase included food and alcohol wholesaling.

Meanwhile, goods prices jumped by 1.1 percent in February on a month-on-month basis.

This was the largest rise since jumping 1.6 percent in August 2023.

A significant factor behind the goods price increase was food costs. (AFP)


Edited by Aaron Tam