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.