Wholesale prices eased more than expected last month in another sign that the Federal Reserve’s aggressive effort to fight inflation appears to be having an impact.
The Labor Department’s Producer Price Index (PPI) fell 0.5% in December, down from a 0.2% gain the month before and well below economists’ estimates. It was the largest monthly decline since April 2020. Year-over-year, the rate of wholesale inflation decelerated sharply to 6.2% from 7.3%, also below forecasts and the lowest it's been since March 2021.
Excluding food, energy, and trade services, the PPI was up 0.1% month-over-month, but the annual rate dropped to 4.6% from 4.9% in November.
Final demand prices for goods declined 1.6%, the biggest slide since July. Nearly half of that was attributable to a 13.4% plunge in gasoline prices. Food costs were lower for the first time in four months, down 1.9%, led by a 9.4% drop in fresh and dry vegetable prices. However, egg prices soared 24.5%.
Services Prices Up
Final demand prices for services rose 0.1%. The biggest jumps came in fuels and lubricants retailing, where prices rose 17.6%, and banking deposit services, where they rose 16.4%.
The PPI followed last week’s report showing consumer inflation also slowed last month.