It was just on Wednesday that the markets were somehow spooked by a higher inflation reading in the January Consumer Price Index report. This CPI came in hotter than expected, but that should have been expected. After all, we saw 2.9% wage growth in January, and regional Federal Reserve reports, the ISM and other business groups have all been talking up wage pressure, as well as prices received and the prices for inputs and transportation costs rising.

Now we have a reading for the Producer Price Index in January. The Bureau of Labor Statistics (BLS) report on PPI for final demand showed a monthly gain of 0.4% on headline and a gain of 0.4% on the reading for the core PPI, which excludes volatile food and energy. Bloomberg was calling for a 0.4% gain in January’s headline PPI, but it was only looking for a 0.2% gain in the core reading.

The annual readings are where the real inflation is more evident. PPI was up 2.7% versus January 2017 on the headline report, and the core PPI reading (again, sans food and energy) was up by 2.5%.

There is also a truer version of PPI’s core reading, which removes not only food and energy but also so-called trade services. This figure was up by 0.4% in January on the monthly reading but was up 2.5% on the annual comparison.

While price gains were broadly based, the BLS did note of the monthly gains:

Nearly two-thirds of the broad-based increase is attributable to the index for final demand services less trade, transportation, and warehousing, which moved up 0.4 percent. Margins for final demand trade services rose 0.3 percent, and prices for final demand transportation and warehousing services advanced 0.4 percent… A major factor in the January increase in prices for final demand services was the index for hospital outpatient care, which rose 1.0 percent. The indexes for apparel, footwear, and accessories retailing; health, beauty, and optical goods retailing; residential real estate services (partial); long-distance motor carrying; and hospital inpatient care also moved higher.

There were a few areas where prices were shown to be in decline. These included margins for chemicals and allied products wholesaling (−2.3%), and prices for wireless telecom services and airline passenger services also fell.

Of course there is the attribution to higher gasoline and energy prices, which causes higher transportation costs. Nearly half of the January increase in the index for final demand goods was attributable to a 7.1% gain in gasoline prices. The indexes for residential electric power, iron and steel scrap, diesel fuel and jet fuel also moved higher.

Thursday’s report on producer prices was actually hotter than the consumer report when it comes to inflationary pressures. That being said, producer prices can rise at much higher rates than consumer prices due to clearance sales, discounting and outright competition keeping a lid on retailers’ abilities to pass on all the price hikes at the register.

The markets are also growing more used to the notion that higher wages, stronger business spending, better tax rates, higher energy prices and higher input costs actually may add up to inflation.

The Dow Jones industrial average was last seen up 208 points at 25,102, and the 10-year Treasury yield was down a basis point to 2.91%.

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