Customers shop for clothing at a Costco store on December 11, 2024 in Novato, California.
Justin Sullivan | Getty Images
A measure of wholesale prices increased less than expected in December, providing indication that pipeline inflation pressures eased to close the year.
The producer price index rose just 0.2% on the month, less than the 0.4% increase in November and below the Dow Jones consensus estimate for 0.4%, according to a Bureau of Labor Statistics report Tuesday.
Excluding food and energy, so-called core PPI was flat compared to the forecast for a 0.3% rise. Excluding food, energy and trade services, the measure rose just 0.1%.
Goods prices increased 0.6%, pushed by a 9.7% surge in gasoline prices. Upward moves in several food and energy related measures were offset by a 14.7% slide in prices for fresh and dry vegetables.
On the services side, prices were flat, despite a 7.2% increase in passenger transportation that was offset by a fall in prices for traveler accommodation.
Stock market futures shot higher following the report while Treasury yields moved lower after pushing sharply higher in the early days of 2025.
The release is the first of two key inflation readings this week that likely will figure in to the Federal Reserve’s interest rate decision later in January.
On Wednesday, the BLS will release its more closely watched reading on the consumer price index. That is expected to show 0.3% monthly gains on both the headline and core readings and respective annual inflation rates of 2.9% and 3.3%.
Though the central bank focuses more on the Commerce Department’s personal consumption expenditures price index as its main inflation gauge, PPI and CPI readings figure into that calculation.
Markets pricing overwhelmingly points to the Fed staying on hold at the Jan. 28-29 meeting. However, policymakers, and Chair Jerome Powell in particular, could lay the groundwork for what is ahead as far as rates go. Fed funds futures pricing Tuesday implied just one rate cut through the rest of the year; Bank of America economists on Monday said they think the Fed could be done this year.
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