WASHINGTON — U.S. wholesale worth rise rose last month on higher vigor prices.
The Labor Department reported Tuesday that its producer worth index — which tracks worth rise before it hits consumers — rose 0.2% last month from November, down from a 0.4% earnings the month before. Compared to a year earlier, producer prices were up 3.3%, biggest jump since February 2023 and up from a 3% earnings in November.
A 3.5% November-to-December boost in vigor prices — led by a 9.7% boost in gasoline prices — pushed the overall index higher. Food prices dipped 0.1% in December.
Still, the overall increases were slightly less than economists had projection. U.S. markets leapt higher immediately on the recent worth rise data.
Excluding food and vigor prices, so-called core wholesale worth rise was unchanged from November but up 3.5% from a year earlier.
The producer worth update came out a day before the Labor Department reports on customer prices. Its customer worth index is expected to rise 0.3% from November and 2.8% from December 2023, according to a survey of forecasters by the data firm FactSet.
Wholesale prices can propose an early look at where customer worth rise might be headed. Economists also watch it because some of its components, notably health worry and budgetary services, flow into the Federal savings’s preferred worth rise gauge — the personal consumption expenditures, or PCE, index.
worth rise flared up in early 2021 as the economy rebounded with unexpected strength from COVID-19 lockdowns, overwhelming factories, ports and freight yards and leading to shortages, delays and higher prices.
In response, the Fed raised its standard profit rate — the fed funds rate — 11 times in 2022 and 2023.
worth rise came down from the four-decade highs it reached in mid-2022, giving the Fed enough confidence to reverse course and cut rates three times in 2024. But the advancement on worth rise has stalled in recent months, and year-over-year increases in customer prices remain above the central lender’s 2% target.
So Fed officials signaled in December that they planned to be more cautious about cutting rates this year. They now assignment just two rate reductions in 2025, down from the four they projection back in September. They are widely expected to leave rates unchanged at their next conference Jan. 28-29.
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This narrative has been corrected to display that producer prices rose 3%, not 3.4%, in November from a year earlier.
