WASHINGTON- US producer prices rose less than expected in December as higher costs for goods were partially offset by stable services prices, suggesting inflation remained on a downward trend after progress had stalled in recent months.
The moderation in producer inflation reported by the Labor Department on Tuesday did not change the view that the Federal Reserve would not cut interest rates again before the second half of this year amid labor market resilience and the threat of potentially inflation-boosting tariffs on imported goods by President-elect Donald Trump’s incoming administration.
“Better than expected is not necessarily what the Fed wants to see before easing monetary conditions into a fast-growing economy, with tariffs and tax cuts on the agenda of the incoming administration,” said Carl Weinberg, chief US economist at High Frequency Economics.
The producer price index for final demand rose 0.2 percent last month after an unrevised 0.4 percent advance in November, the Labor Department’s Bureau of Labor Statistics said. Economists polled by Reuters had forecast the PPI would climb 0.3 percent.
In the 12 months through December, the PPI accelerated 3.3 percent, the most since February 2023, after increasing 3.0 percent in November.
The surge in the year-on-year rate reflected lower prices last year, especially for energy products, that dropped out of the calculation. Inflation increased 3.3 percent in 2024 after rising 1.1 percent in 2023.
