US PPI Report Sparks Concerns About Tighter Financial Conditions

The release of the January 2026 Producer Price Index report from the Bureau of Labor Statistics has sent shockwaves through financial markets. The data showed that wholesale inflation was higher than expected, supporting predictions that the Federal Reserve might keep interest rates high for a longer period.

Headline producer prices rose 0.5% month over month, exceeding forecasts of 0.3%. Core PPI, which excludes food and energy, also increased 0.8% on the month and 3.6% year over year, marking its highest reading in around 10 months.

Services prices were the main driver of the increase, with final demand services jumping 0.8%, the largest gain since July. Trade services margins surged 2.5%, while professional and commercial equipment wholesaling rose 14.4% due to higher import costs tied to tariffs.

The data has caused a decline in Bitcoin's price, which fell toward $66,000 as rate-cut hopes weakened. Ethereum and major altcoins also posted similar declines. Analysts warn that if producer price pressures continue feeding into consumer inflation, liquidity conditions could tighten further, limiting upside for digital assets.