US wholesale prices rose a hotter-than-expected 0.5% in December. The Labor Department reported Friday that its producer price index—which measures inflation before it hits consumers—rose from November to December at the fastest pace in three months and faster than the 0.3% economists had forecast, the AP reports. Compared to December 2024, producer prices were up 3% last month, which was in line with what forecasters expected. Services prices were up 0.7% from November, the biggest increase since July, mostly reflecting fatter profit margins at wholesalers and retailers.
But while hotel prices and airline fares rose significantly, the price of goods—such as appliances and autos—was unchanged last month and up 2.5% from a year earlier. Economists had worried that President Trump's double-digit taxes on imports would drive inflation higher. Their impact has so far been more modest than expected, although inflation remains above the Federal Reserve's 2% target. Friday's producer price report came out more than two weeks late, delayed by the 43-day federal government shutdown last fall.
Wholesale prices can offer an early look at where consumer inflation might be headed. Economists also watch it because some of its components, notably measures of health care and financial services, flow into the Federal Reserve's preferred inflation gauge—the personal consumption expenditures, or PCE, price index. Analysts say the figures support the Fed's decision to keep its key rate unchanged this week and with consumer inflation likely to rise, the central bank is likely to keep the key rate steady for months.
- The Labor Department released its more closely watched consumer price index on Jan. 13. It showed that inflationary pressure eased slightly for consumers in December as prices for gas and used cars fell.
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