US wholesale prices picked up in February in a sign that inflation pressures remain elevated

Thursday's data also showed that underlying inflation also picked up last month. Excluding volatile food and energy costs, “core” wholesale prices rose 0.3%, down from a 0.5% jump the previous month. Compared with a year ago, core prices climbed 2%, the same as the previous month. Core inflation, which tends to provide a better sign of where inflation may be headed, is watched particularly closely.

Persistently elevated inflation could become a threat to Biden's re-election bid, which is being bedeviled by Americans' generally gloomy view of the economy. Consumer inflation has plummeted from a peak of 9.1% in 2022 to 3.2%. Yet many Americans are exasperated that average prices remain about 20% higher than they were before the pandemic erupted four years ago.

Thursday’s data follows a report earlier this week on the government’s most closely watched inflation measure, the consumer price index. The CPI rose by a sharp 0.4% from January to February, a faster pace than is consistent with the Fed’s 2% inflation target. Compared with a year earlier, prices rose 3.2%, up from a 3.1% increase the previous month.

The CPI report, which marked the second straight pickup in consumer prices, illustrated why Fed officials have signalled a cautious approach toward implementing rate cuts. After meeting in January, the officials said in a statement that they needed “greater confidence” that inflation was steadily falling to their 2% target level. Since then, several of the Fed’s policymakers have said they think inflation will keep easing.

In December, the policymakers had signalled they would reduce their rate three times this year. On Wednesday, the officials will issue new quarterly projections that could either maintain or revise that forecast.

Last week, Fed Chair Jerome Powell signalled to Congress that the central bank was “not far” from starting rate cuts. Most economists and Wall Street investors have said they expect the first cut to occur in June.

Solid spending and hiring so far this year show that the economy has stayed healthy despite the Fed’s aggressive series of rate hikes in 2022 and 2023. Last month, employers added a solid 275,000 jobs, the government reported. And though the unemployment rose by two-tenths to a still-low 3.9%, it has remained below 4% for more than two years -- the longest such stretch since the 1960s.