Input Stories

Input Stories

Producer Prices Decline

Prices paid to producers in the U.S. declined unexpectedly in December, falling for the third month in a row, according to Bloomberg.

What’s going on: “The producer price index for final demand decreased 0.1% last month. Excluding food and energy, the so-called core PPI was little changed for a third month, Labor Department data showed Friday.”

  • The overall measure was up 1% from a year ago, while the core measure increased 1.8%, the smallest advance in three years.
  • Economists had forecast a 0.2% increase in PPI this month, according to Barron’s.
  • The news follows the release yesterday by the Labor Department of higher-than-expected consumer prices in December.

Digging deeper: A large part of the decrease is owed to diesel-fuel prices, which declined 12.4%.

Why it’s important: “Overall, these data reflect a continued trend toward disinflation for raw material costs in the economy—a trend that is very encouraging for manufacturers,” said NAM Chief Economist Chad Moutray.

  • “In addition, the moderation of pricing pressures is welcome news to the Federal Reserve.”
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