Producer prices in the U.S. increased by only 0.2% in December, down from November’s 0.3% and matching August’s performance. Annually, the producer price index (PPI) climbed to 3.3% from 3.2%, hitting the highest level since February 2023.
- Economists had predicted a 0.3% monthly rise, expecting the annual index to also reach 3.3%.
Core prices held steady in December. The annual index rose to 3.5%, which was better than anticipated.
The Cause: The index for final demand goods rose by 0.6%, driven by a 3.5% increase in energy prices, while services prices remained unchanged. While goods are influenced by volatile energy costs, the stabilization in service prices might suggest a consumer demand shift or operational efficiencies.
- This unexpected moderation in price growth could signal a cooling inflation trend, potentially influencing future economic policies.
Bottom Line: Prices are continuing to rise but the slower-than-expected rise is a welcome sign for traders. However, the rise in energy prices and goods overall could be a bad sign for price growth in 2025.
