US PPI Surges Past Estimates Pushing Bitcoin Lower

• US PPI rose 0.7% MoM and 3.4% YoY in February, above forecasts
• Core PPI reached 3.9% YoY, exceeding expectations of 3.7%
• Bitcoin dropped near $71,000 as rate cut expectations declined

US producer prices rose above expectations in February, signaling renewed inflation pressure across key sectors. The data arrives hours before the Federal Reserve’s rate decision, while Bitcoin declined sharply. Markets are reassessing rate cut expectations as higher energy costs and broad price increases shape the near-term economic outlook.

US PPI Data Exceeds Expectations Across Key Measures

The US Bureau of Labor Statistics reported a 0.7% monthly rise in the Producer Price Index for February. This was above the expected 0.3% increase. January data showed a 0.5% rise, indicating a faster pace of price growth. On a yearly basis, headline PPI reached 3.4%, compared to the expected 3.0%. 

Core PPI, which excludes food and energy, rose 0.5% monthly. It also reached 3.9% year over year, exceeding the 3.7% estimate. Energy and food prices drove much of the increase. Energy goods rose 2.3%, while processed energy goods climbed 5.5%.

Diesel fuel prices increased 13.9%, contributing heavily to the overall rise. Food prices also played a role, rising 2.4% during the month. Vegetable prices surged sharply, while other categories such as eggs and fuel also moved higher.

These gains pushed final demand goods up by 1.1%. Services prices rose 0.5%, marking the third consecutive monthly increase. Gains were seen in trade, transport, and other service categories, showing broad price movement across the economy.

Intermediate Demand and Energy Costs Drive Momentum

Intermediate demand prices showed strong gains in February. Processed goods rose 1.6%, marking the largest increase since August 2023. Unprocessed goods increased 3.1%, led by energy materials. Natural gas prices rose 10.9%, while crude petroleum also moved higher.

These increases reflect rising input costs for businesses. Services for intermediate demand rose 0.8%, showing continued pressure across supply chains.

Stage-based data also showed increases at all levels of production. Stage 4 demand rose 1.0%, while stage 2 demand climbed 1.8%. These figures indicate that price pressures are moving through production layers.

The Bureau of Labor Statistics stated that energy costs were a major driver. It noted that processed energy goods accounted for a large share of the increase. 

Rising geopolitical tensions have contributed to higher oil prices. Broader measures also showed continued increases. Prices excluding food, energy, and trade services rose 0.5% in February. This marked the tenth consecutive monthly increase in that category.

Bitcoin Declines as Markets Adjust Rate Expectations

Financial markets reacted quickly to the inflation data. Bitcoin fell toward the $71,000 range following the release. Traders reduced expectations for near-term rate cuts by the Federal Reserve. CME FedWatch data showed a high probability that the Fed will hold rates steady. 

However, expectations for future easing have weakened. Higher inflation data tends to delay policy changes. Risk assets, including cryptocurrencies, often respond to interest rate outlook changes. When rate cuts appear less likely, liquidity expectations shift.

This can lead to downward pressure on prices. The inflation data comes ahead of the Federal Open Market Committee decision. Market participants are focused on the Fed’s guidance.

Comments from officials will shape expectations for the coming months. Recent statements from policymakers have pointed to caution on inflation. Officials have noted that price stability remains a key focus. The latest PPI data adds to that concern.

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