WASHINGTON — The U.S. January producer price index data showed the same astounding inflation acceleration as the consumer price index, and the component price gains were as widespread as they were hard to explain away.

January PPI posted up 1.0%, with core up 0.4%, more bad price news that should be “less surprising” after the bad January CPI shocked markets.

Among the indications that perhaps price pressures are overstated by the January monthly data were new seasonal adjustment factors and weights that seemed to boost January prices. January 2007, for example, was reported at off 0.1% after revision; before revision it was down 0.6%.

In addition, many industries post January price hikes that do not hold for the full year. This year’s hikes may have been particularly severe due to rising energy prices, which probably affected plastics and pharmaceutical items that are closely related. But the bottom line is that this was a dismal report with widespread price pressures.

Over-the-year PPI is running at plus-7.4%, its highest pace since a plus-7.5% in October 1981, and over-the-year core is up 2.3%.

— Market News International

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