The Labor Department announced Tuesday that its producer price index, which tracks inflation before it reaches consumers, rose 0.2% last month from November, a slowdown after a increase of 0.4% the previous month. Compared to the previous year, producer prices increased by 3.3%, the largest increase since February 2023 and up from a 3% increase in November.
A 3.5% increase in energy prices from November to December, fueled by a 9.7% rise in gasoline prices, pushed the overall index higher. Food prices fell by 0.1% in December.
Still, the increases overall were slightly lower than economists had expected. US markets surged higher on the heels of new inflation data.
Excluding food and energy prices, so-called core wholesale inflation was unchanged from November, but up 3.5% from a year earlier.
The report on producer prices was released a day before the Labor Department’s report on consumer prices. Its consumer price index is expected to rise 0.3% from November and 2.8% from December 2023, according to a survey of forecasters by data firm FactSet.
Wholesale prices can offer a first glimpse of where consumer inflation might be headed. Economists are also watching it because some of its components, including health care and financial services, enter into the Federal Reserve’s preferred inflation gauge — the personal consumption expenditures index, or PCE.
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