(Bloomberg) -- US wholesale inflation stagnated in February thanks to a sharp decline in trade margins, though one measure of goods prices jumped and details were also less favorable for the Federal Reserve’s preferred inflation gauge.

The producer price index was unchanged from a month earlier following a revised 0.6% increase in January, according to a Bureau of Labor Statistics report released Thursday. Excluding food and energy, the PPI declined for the first time since July.

The index was weighed down by a 1% drop in trade services, a category which reflects changes in margins received by wholesalers and retailers. Categories that inform the Fed’s preferred inflation measure — the personal consumption expenditures price index — were largely firmer, including a 1% increase in hospital inpatient care and a 0.5% rise in portfolio management costs.

Goods prices excluding food and energy also advanced by 0.4%, the most in more than two years.

The drop in margins “tentatively signals that consumers will be shielded from some of the forthcoming increase in manufacturers’ selling prices and import prices,” Samuel Tombs, the chief US economist at Pantheon Macroeconomics, said in a note.

“With consumers’ confidence weak and many people already having brought forwards purchases of durable goods, demand for goods will be very weak later this year, forcing retailers to accept thinner margins,” Tombs said.

Thursday’s data follow a BLS report Wednesday which showed consumer prices rose just 0.2% last month, the smallest increase since October. However, details from the CPI also pointed to a higher PCE price gauge when that figure is reported later this month, and economists are already looking ahead to the potential impact on prices this year of sweeping tariffs imposed by President Donald Trump on the country’s largest trading partners.

Tariff Impact

In early February, the Trump administration put in place an additional 10% levy on goods imported from China. Details of the producer prices report showed robust increases in categories including iron and steel scrap, various types of machinery and household items like furniture, appliances and jewelry.

The PPI data also showed food prices rose 1.7% — the most in three months — amid an ongoing surge in egg prices. Energy costs declined 1.2%. The Bloomberg Commodity Index rose in mid-February to the highest level since 2023 before tumbling in the final week of the month amid a broader rout in financial markets.

A separate report Thursday showed little change in initial applications for jobless benefits last week, underscoring labor market resilience.

(Updates with chart, economist comment and more details throughout.)