WASHINGTON – U.S. producer price inflation slowed in December as the cost of goods fell amid signs that stretched supply chains were starting to ease, hopeful signs that inflation has probably peaked.
The producer price index for final demand increased 0.2% last month after surging 1.0% in November. Wholesale services prices rose 0.5%, accounting for the increase in the PPI. That followed a 0.9% jump in November.
Goods prices fell 0.4% after advancing 1.1% in the prior month. They were held down by decreases in wholesale food and energy prices. Excluding food and energy, goods prices rose
0.5% after increasing 0.8% in November.
In the 12 months through December, the PPI increased 9.7% after accelerating 9.8% in November.
The government revised PPI data from last August through November because of the late submission of data as well as to account for corrections by respondents.
Economists polled by Reuters had forecast the PPI gaining 0.4% on a monthly basis and surging 9.8% year-on-year.
The Fed has a 2% inflation target. Inflation is surging as COVID-19 and the recovery from the pandemic have caused bottlenecks in the supply chain. Consumer prices jumped 7% year-on-year in December, the largest gain since June 1982, the government said on Wednesday.
But there is cautious optimism that price pressures are close to peaking. An Institute for Supply Management survey last week showed manufacturers reporting improved supplier deliveries in December.
Excluding the volatile food, energy and trade services components, producer prices rose 0.4% in December. The so-called core PPI vaulted 0.8% in November. In the 12 months through December, the core PPI rose 6.9%, matching November’s increase.
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)