Producer prices in the United States experienced a slightly smaller increase than anticipated for December, as reported by the Labor Department on Tuesday.
The department's data indicated that the producer price index for final demand edged up by 0.2% in December, following a 0.4% rise in November. This was below the economists' prediction of a 0.3% increase.
In contrast, the annual growth rate of producer prices accelerated to 3.3% in December, up from 3.0% in November, aligning with economists' forecasts.
The modest monthly gain in producer prices was mainly driven by a significant rise in energy prices, which surged by 3.5% in December after remaining stable in November.
Additionally, prices for meats, motor vehicles, and fresh fruits and melons saw increases, whereas prices for fresh and dry vegetables and carbon steel scrap declined.
The report further noted that prices for services remained stable in December, as an increase in transportation and warehousing costs was balanced by reductions in trade and other service prices.
Core producer prices, excluding food, energy, and trade services, increased slightly by 0.1% in December, consistent with November's rise.
The annual growth rate for core producer prices decreased to 3.3% in December from 3.5% in the previous month.
"Besides the spike in energy costs, input costs were significantly cooler in December," commented Ben Ayers, Senior Economist at Nationwide. "This lowers the upper range of expectations for tomorrow's CPI report and sets the stage for milder inflation readings in early 2025."
He further noted, "Nevertheless, tariff uncertainty lingers, with many survey respondents expressing concerns about rising costs this year, potentially posing unexpected inflationary pressures for consumers."
The Labor Department is set to release its more highly anticipated consumer price inflation report for December on Wednesday.
Economists currently predict that consumer prices will rise by 0.3% in December, consistent with November’s increase. The annual growth rate is anticipated to rise to 2.9% from 2.7%.
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