US producer prices rise moderately in December
US producer price inflation slowed in December as the cost of goods fell amid signs that stretched supply chains were starting to ease, hopeful signs that inflation has probably peaked.
The producer price index (PPI) for final demand increased 0.2 per cent last month after surging 1.0 per cent in November. Wholesale services prices rose 0.5 per cent, accounting for the increase in the PPI. That followed a 0.9 per cent jump in November.
Goods prices fell 0.4 per cent after advancing 1.1 per cent in the prior month. They were held down by decreases in wholesale food and energy prices. Excluding food and energy, goods prices rose 0.5 per cent after increasing 0.8 per cent in November.
In the 12 months till December, the PPI increased 9.7 per cent after accelerating 9.8 per cent in November.
The government revised PPI data from last August till November because of the late submission of data as well as to account for corrections by respondents.
Economists polled by Reuters had forecast the PPI gaining 0.4 per cent on a monthly basis and surging 9.8 per cent year-on-year.
The Fed has a 2 per cent inflation target. Inflation is surging as Covid-19 and the recovery from the pandemic have caused bottlenecks in the supply chain. Consumer prices jumped 7 per cent year-on-year in December, the largest gain since June 1982, the government said on Wednesday (Jan 12).
But there is cautious optimism that price pressures are close to peaking. An Institute for Supply Management survey last week showed manufacturers reporting improved supplier deliveries in December.
Excluding the volatile food, energy and trade services components, producer prices rose 0.4 per cent in December. The so-called core PPI vaulted 0.8 per cent in November. In the 12 months till December, the core PPI rose 6.9 per cent, matching November’s increase.