U.S. Wholesale Prices Increase Slower Than Expected in December

According to the Labor Department, U.S. wholesale prices experienced a modest rise of 0.2% in December. This increase was less than what many analysts anticipated.

The Producer Price Index (PPI) for December showed a seasonally adjusted rise of 0.2%. In contrast, the core PPI, which excludes food and energy, remained unchanged during the same month. On an annual basis, the PPI has increased by 3.3%, which is a notable rise compared to the 1.1% increase observed in 2023.

This December increase was below Dow Jones predictions, which had forecasted a surge of 0.4% in producer prices for the month. In fact, prices had risen by 0.4% in November, providing some relief in terms of inflation for wholesalers.

According to the report, the primary factor behind the rise in wholesale prices was a 0.6% increase in goods for the month, while prices for final demand services remained stable. The core PPI, which excludes food, energy, and trade services, showed a slight increase of 0.1%, consistent with the increase seen in November.

Factors Influencing Price Changes

The Labor Department indicated that this December increase marks the third consecutive month of rising prices for PPI goods. When we examine the core PPI index, which does not include food, energy, and trade services for 2024, it increased 3.3%, exceeding the Federal Reserve's benchmark, and considerably higher than the 2.7% core PPI increase in 2023.

The increase in prices for final demand goods was driven largely by a significant 3.5% increase in the final demand energy index. In contrast, prices for final demand foods decreased slightly, falling by 0.1%, while the index for final demand goods, excluding food and energy, showed no change.

The final service demand index remained consistent after having gone up by 0.3% in November. While there was a 2.2% boost in final demand transportation and warehousing services, this was counterbalanced by a 0.2% decline in trade services related to transportation and warehousing.

Wholesale, Prices, Economy