Shock jump in US producer prices

US consumers are the biggest driver of the world’s largest economy.

US producer prices have jumped by more than analysts forecast in February.According to the latest Labor Department figures, prices climbed by 1.3% in February compared to last year. In January, prices dipped by 0.6%.

The driving force behind the increase was a surge in the cost of food, energy and toys, the Department said.

The figures underline fears that US inflationary pressures are still strong and will need further interest rate rises to bring them under control.

At present, the US interest rates stand at 5.25%, and some economists had been calling for a rate cut amid fears that the world’s largest economy may be slowing and the belief that inflation was under control.

But now concerns are mounting that the US Federal Reserve may increase the cost of borrowing at its meeting next week, especially as consumer prices have also been climbing.

“The Fed is not cutting anything if this is the type of inflation we are seeing.” said Robert MacIntosh, chief economist at Eaton Vance Management in Boston.