Wholesale prices fell 0.5% in December, much more than expected

Wholesale prices fell 0.5% in December, much more than expected

Wholesale prices fell 0.5% in December, more than expected

Prices of wholesale goods and services fell sharply in December, another sign that inflation, while still high, is beginning to ease.

The producer price index, which measures final demand prices in hundreds of categories, fell 0.5% for the month, the Labor Department reported on Wednesday. Economists polled by Dow Jones had expected a 0.1% decline.

Excluding food and energy, the core PPI measurement rose 0.1%, in line with the estimate.

A sharp drop in energy prices helped push headline inflation for the month lower. The PPI Final Demand Energy Index plunged 7.9% over the month. Within this category, wholesale gasoline prices fell 13.4%.

The food final demand index also fell, falling 1.2%.

However, future inflation data may be less certain as the cost of a gallon of gasoline has risen about 21 cents since this time last month and crude oil prices are up about 1.6% so far in January.

Nevertheless, the general inflation trend was somewhat lower. The consumer price index fell 0.1% in December but was still up 6.5% yoy – 5.7% excluding food and energy. CPI measures the prices consumers pay in the marketplace, while PPI measures what businesses pay for goods and services.

The falling prices were reflected in another economic report released on Wednesday.

Retail sales fell 1.1% in December, slightly more than the 1% forecast. These numbers are not adjusted for inflation, so the latest reading reflects both falling inflation and sluggish consumer demand during the holiday shopping season.

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