Inflation in the U.S. showed signs of moderation in December as producer prices rose less than expected, reflecting stable service costs and only modest increases in goods prices. The data suggests inflation remains on a downward trajectory, despite slowing progress in recent months.
The producer price index (PPI) for final demand increased by 0.2% in December, following an unrevised 0.4% rise in November, according to the U.S. Bureau of Labor Statistics. Economists had anticipated a 0.3% increase.
Annually, the PPI climbed 3.3%, accelerating from November’s 3.0% gain and slightly below expectations of 3.4%, marking the highest year-over-year increase since February 2023.
However, the annual rise largely reflected the base effects of lower energy prices in 2023, which had dropped out of the calculation.
Economists cautioned against over-interpreting the modest rise in producer prices, noting that December tends to show softer inflation data.
However, they do not expect similar trends in the consumer price index (CPI), with forecasts predicting a 0.3% monthly rise in CPI for December, consistent with November’s increase.
In terms of goods, wholesale prices rose 0.6% in December, led by a 3.5% surge in energy costs, including a 9.7% jump in gasoline prices. Food prices dipped 0.1% after a 2.9% rise in November, with wholesale egg prices up 0.5%, following a 55.6% surge due to an avian flu outbreak.
Excluding food and energy, goods prices remained unchanged for the first time since March.