US Producer Prices Rise 3.4% in February, Highest in a Year

Inflation pressures build before US-Israel attack on Iran drove energy prices higher

Mar. 18, 2026 at 6:18pm

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The U.S. Labor Department reported that the producer price index, which measures wholesale inflation, rose 0.7% from January and 3.4% from a year earlier in February - the biggest jump in a year. The gains were driven by a sharp increase in food prices and were higher than economists had forecast, occurring before the recent military conflict with Iran pushed energy prices sharply higher.

Why it matters

The producer price data provides an early signal of inflationary pressures building in the economy, which could lead the Federal Reserve to consider raising interest rates further to cool down demand. This comes as the Fed is already grappling with high consumer inflation that remains above its 2% target.

The details

The 3.4% year-over-year increase in the producer price index was the largest since February 2025. Excluding volatile food and energy prices, core wholesale prices rose 0.5% from January and 3.9% from a year earlier - the biggest jump since January 2025. Food prices jumped 2.4% from January, led by surges in vegetable and fruit prices.

  • The producer price data is for February 2026.
  • The U.S. and Israel attacked Iran in the period after the February data was collected.

The players

U.S. Labor Department

The federal agency that collects and reports economic data, including the producer price index which measures wholesale inflation.

Federal Reserve

The U.S. central bank that is responsible for setting monetary policy, including interest rates, to achieve its dual mandate of stable prices and maximum employment.

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What’s next

The Federal Reserve is expected to announce whether it will raise interest rates further at its upcoming policy meeting in response to the persistent inflation pressures.

The takeaway

The hot producer price data, coming before the geopolitical conflict with Iran, signals that the Federal Reserve may need to continue raising interest rates to bring inflation under control, even as the economic outlook becomes more uncertain.