US Producer Prices Accelerate in December on Services

Reuters
Jan 30

WASHINGTON, Jan 30 (Reuters) - U.S. producer prices increased more than expected in December, with businesses appearing to pass on higher costs from ​import tariffs, suggesting inflation could pick up in the ‌months ahead.

The Producer Price Index for final demand surged 0.5% last month after an unrevised 0.2% gain in November, the Labor Department's Bureau of Labor Statistics said on Friday. Economists polled by Reuters had forecast ‌the PPI climbing 0.2%.

In the 12 months through December, ​the PPI increased 3.0% after rising by the same margin in November.

The BLS is now caught up on the PPI and ‍Consumer Price Index releases that were delayed by the 43-day shutdown of the federal government. U.S. Senate Republicans and Democrats were on Friday racing ⁠to avoid another shutdown at midnight, which would delay data releases ‍from the BLS, including January's employment report due next Friday.

Last month's larger-than-expected rise ‌in ‌producer prices was lead by a 0.7% increase in services. A 1.7% jump in margins for final demand trade services, which measures changes in margins received by wholesalers and retailers, accounted for ⁠two-thirds of the ⁠increase in ​services.

Businesses had been absorbing some of President Donald Trump's sweeping import tariffs, preventing a sharp increase in inflation. The Federal Reserve on Wednesday left ‍its benchmark overnight interest rate in the 3.50%-3.75% range. Fed Chair Jerome Powell attributed the overshoot in inflation to tariffs, adding "but there's an expectation ​that sometime in the middle quarters of ‍the year we'll see tariff inflation topping out."

Producer goods prices were unchanged in ​December.

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