Producer Prices Rise Below Expectations in December

US producer prices increased 0.2% in December, a slower pace than November’s 0.4% rise, signaling moderated inflation. Economists had forecast a 0.3% increase, according to the Labor Department’s report.

Inflation Shows Signs of Progress but Challenges Remain

Annual producer price inflation accelerated to 3.3% in December, up from November’s 3.0%, influenced by lower energy prices dropping out of calculations.

Goods Prices Lead the Increase

Wholesale goods prices rose 0.6%, driven by a 9.7% surge in gasoline costs. Meanwhile, food prices dipped by 0.1%, easing pressure.

Stable Services Prices Offer Mixed Signals

Service prices remained unchanged, influenced by a 7.2% increase in airline fares and a 6.9% drop in hotel accommodation costs.

Fed’s Rate-Cut Path Faces New Questions

The Fed projects a slower path for rate cuts amid resilient labor markets and potential inflationary impacts of the Trump administration’s tariffs.

Mixed Market Reactions to the PPI Data

US stocks traded lower as Treasury yields dipped and the dollar eased. Economists are cautious about broader implications for inflation targets.