U.S. wholesale prices came in hotter than expected last month.

The Labor Department reported Friday that its producer price index, which measures inflation before it hits consumers, rose 0.5% from December and 2.9% from January 2025.

Economists had forecast a 0.3% increase for the month and 1.6% year over year, according to a survey by the data firm FactSet.

Excluding food and energy prices, which bounce around from month to month, so-called core wholesale prices rose 0.8% from December and 3.6% from January 2025 — both higher than forecasters had expected.

Energy prices were down. Wholesale gasoline prices fell 5.5% from December and plunged 15.7% from a year earlier.

Driving the increase was an uptick in the wholesale price of services, led by higher profit margins for retailers and wholesalers.

The producer price report comes two weeks after the Labor Department reported that consumer prices rose just 2.4% last month compared to a year earlier, closing in on the Federal Reserve’s 2% target.

Economists had worried that President Donald Trump’s double-digit taxes on imports would drive inflation higher.

Their impact has so far been more modest than expected — although inflation remains higher than the Fed would like.

Wholesale prices can offer an early look at where consumer inflation might be headed.

Economists also watch it because some of its components, notably measures of health care and financial services, flow into the Fed’s preferred inflation gauge — the personal consumption expenditures, or PCE, price index.