CNN
US producer prices fell in December for the third consecutive month, bringing a closely watched gauge of inflation to a rate more in line with pre-pandemic times.
Wholesale inflation as measured by the Producer Price Index rose 1% annually in December, up slightly from November’s revised 0.8% reading, according to data released Friday by the Bureau of Labor Statistics.
PPI captures average price shifts before they reach consumers, and serves as a potential signal for the prices consumers ultimately end up paying. On Thursday, the December Consumer Price Index, which is the most widely used measure of retail inflation, showed prices rose annually by 3.4%.
Since peaking at a record 11.7% in March 2022, wholesale inflation has cooled drastically, especially during the past year, dropping from an annual 6.4% rate in December 2022 to the modest reading posted Friday.
On a monthly basis, prices fell 0.1%, notching a third straight month of declines with November’s previously flat reading being revised down to a 0.1% drop. Those followed October’s sharp 0.4% decline that was influenced by a steep contraction in energy and gas prices.
In December, final demand goods prices fell for the third consecutive month with a drop of 0.4% that was helped lower by falling food (-0.9%) and energy prices (-1.2%). Final demand services prices were unchanged for the third month in a row.
Economists projected that PPI, which measures the average price changes that businesses pay to suppliers, would pick up by 0.2% for the month and rise 1.4% for the 12 months ended in December, according to FactSet estimates.
When stripping out the food and energy categories, which tend to be volatile, core PPI was flat for the month, bringing the yearly increase down from 2% to 1.8%.
Friday’s report is one of the last major pieces of inflation data (with the critical Personal Consumption Expenditures data scheduled for January 26) to land before the Federal Reserve’s policymaking meeting at the end of the month. The US central bank has become increasingly data dependent in its campaign to bring down inflation.