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Financial report: US wholesale costs rose by nearly zero.2% in December, suggesting that top inflation could also be easing

The payment: Wholesale prices rose just 0.2% in December, the smallest rise in 13 months, perhaps a sign that inflation is finally easing after the biggest rise in almost 40 years.

The rise in the PPI fell below the 0.4% forecast by economists polled by the Wall Street Journal.

The increase in wholesale prices last year fell to 9.7% from 9.8% in the previous month. It was the first decline in the annual rate since the pandemic began.

Still, this is one of the largest 12-month gains since the index was configured in 2009, and probably one of the fastest rates in nearly 40 years.

A separate measure of wholesale prices, which excludes the most volatile goods and services, rose at a faster rate by 0.5% over the past month, the government said on Tuesday.

This so-called core rate rose by 6.9% last year, unchanged from the previous month.

Big picture: The slower rise in wholesale inflation is a welcome sign as they tend to forecast changes in the prices paid by consumers. Consumer inflation rose 7% in 2021, the fastest pace in nearly 40 years.

However, inflationary pressures are still plentiful in the economy and prices are not expected to ease until later in the year.

Alarmed by the surge in inflation, the US Federal Reserve plans to raise interest rates soon and take further steps to ease price pressures.

Key data: The cost of retail services, travel, etc. rose 0.5% in December, accounting for the largest increase in wholesale prices.

However, the cost of goods fell 0.4%, marking the first drop since April 2020. Energy prices, mainly oil, fell 3.3%. The wholesale cost of groceries also fell by 0.6%.

However, it remains to be seen whether these declines can be sustainable. Food producers still face higher costs for feed, packaging and labor, while oil prices could rise again as more people take to the streets.

Another good sign is that the cost of semi-finished goods fell for the first time since April 2020. And another measure of commodity prices fell 5.6% — the first drop in eight months.

Market reaction: The Dow Jones Industrial Average
djia,
+0.39%
and S&P500
SPX,
+0.31%
were set to open higher in Thursday trading. Investors were not upset by high inflation or the prospect of the Federal Reserve raising interest rates anytime soon.

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