U.S. Producer Prices Decrease 0.5% In December Amid Steep Drop In Energy Prices
January 18 2023 - 04:46AM
Partly reflecting a steep drop in energy prices, the Labor
Department released a report on Wednesday showing U.S. producer
prices fell by more than expected in the month of December.
The Labor Department said its producer price index for final
demand declined by 0.5 percent in December after inching up by a
revised 0.2 percent in November.
Economists had expected producer prices to edge down by 0.1
percent compared to the 0.3 percent increase originally reported
for the previous month.
The report also showed the annual rate of producer price growth
slowed to 6.2 percent in December from 7.3 percent in November. The
year-over-year growth was expected to slow to 6.8 percent.
The bigger than expected monthly decrease in producer prices
came as energy prices plummeted by 7.9 percent in December after
plunging by 3.2 percent in November. The steep drop largely
reflected a 13.4 percent nosedive by gasoline prices.
The report also showed a sharp pullback in food prices, which
tumbled by 1.2 percent in December after surging by 3.3 percent in
Meanwhile, the Labor Department said prices for services inched
up by 0.1 percent in December after rising by 0.2 percent in the
The uptick in prices for services came as a 0.3 percent increase
in prices for trade services was partly offset by a 0.2 percent dip
in prices for transportation and warehousing services.
Excluding prices for food, energy and trade services, producer
prices crept up by 0.1 percent in December after climbing by 0.3
percent in November.
"The downside surprise in the December PPI report reaffirms our
expectations for headline PPI inflation to cool markedly in the
months ahead, though much of latest decline can be attributed to
the volatile final demand for energy, tempering some of the
positive news," said Matthew Martin, U.S. Economist at Oxford
He added, "We do not expect outright year-over-year declines to
the headline index in 2023, but inflation should fall below the 2%
mark by the second quarter of the year."
Last Thursday, the Labor Department released a separate report
showing a modest decrease in U.S. consumer prices in the month of
The Labor Department said its consumer price index edged down by
0.1 percent in December after inching up by 0.1 percent in
November. Economists had expected consumer prices to come in
The report also showed the annual rate of consumer price growth
slowed to 6.5 percent in December from 7.1 percent in November, in
line with expectations. The annual growth was the slowest since
Excluding food and energy prices, core consumer prices rose by
0.3 percent in December following a 0.2 percent uptick in November.
The increase matched economist estimates.
The annual rate of core price growth slowed to 5.7 percent in
December from 6.0 percent in November. The year-over-year growth
was also in line with expectations.
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