U.S. producer prices increase after two and a half years

This year, February witnessed a rise in U.S. producer prices nearly after two and a half years, but the labor market slack may hurdle businesses to pass on the higher costs to consumers.

The producer price index for final demand rose 0.5% last month, the Labor Department said on Friday. That followed a 1.3% jump in January, which was the biggest advance since December 2009.

“Beyond a rise in the metrics this year on base effects and a fuller reopening of the economy that will revive demand, price pressures are unlikely to keep accelerating, given an incomplete recovery in the labor market,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York.

At least 20.1 million Americans are on unemployment benefits, limiting businesses’ ability to ask for higher prices.