WASHINGTON (Reuters) – U.S. producer prices rose moderately in December, suggesting that inflation expectations in the coming months may not be worrying.
Producer price index for final demand rose 0.3% last month, after rising 0.1% in November, the Department of Labor said on Friday. In the 12 months through December, the PPI rose 0.8%, matching the November gain.
The increase in the cost of goods was due to a 1.1% increase in the PPI last month. Prices for services fell 0.1%.
Economists surveyed by Reuters had forecast that the PPI would rise 0.4% in December and gain 0.8% year-on-year.
This week the government announced a sharp rise in consumer and import prices in December. Economists expect inflation to accelerate in the coming months as the government provides more money to stimulate the economy, and weak early prices in a coronavirus crisis will fall out of the calculation.
But the spark of temporary inflation against a backdrop of slavery may be enough in the labor market, with at least 18.4 million Americans on unemployment benefits.
The Federal Reserve has said it would accept higher prices after inflation consistently hit the U.S. central bank’s 2% target.
Excluding the volatile food, energy and trade services components, producer prices rose 0.4%. The so-called basic PPI went up 0.1% in November. In the 12 months through November, the underlying PPI gained 1.1% after rising 0.9% in November.
Energy prices jumped 5.5% last month after advancing 1.2% in November. Wholesale food prices fell 0.1%. Prices of basic goods rose 0.5%. Margins for end-to-end trading services, which measure changes in margins received by wholesalers and retailers, fell 0.8%. Healthcare costs rose 0.1%, and baggage taxes jumped 1.7%.
These health care and portfolio costs feed into the personal consumption price index (PCE), the Fed’s preferred measure of inflation.
Reciting with Lucia Mutikani; Edited by Catherine Evans