A customer purchases clothing at a Costco store on December 11, 2024 in Novato, California.
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A measure of wholesale prices rose less than expected in December, suggesting pipeline inflation pressures eased at the end of the year.
Producer prices rose just 0.2% this month, down from a 0.4% gain in November and below the Dow Jones average estimate of 0.4%. Bureau of Labor Statistics Report Tuesday.
Excluding food and energy, so-called core PPI was in line with expectations for a 0.3% rise. Excluding food, energy and trade services, the indicator rose just 0.1%.
Gasoline prices rose 9.7%, pushing commodity prices up 0.6%. Gains in some food and energy-related indicators were offset by a 14.7% decline in fresh and dried vegetable prices.
On the services side, prices remained flat despite a 7.2% increase in passenger traffic, offset by lower passenger accommodation prices.
Stock futures soared after the report, while Treasury yields were lower after rising sharply in early 2025.
The release is the first of two key inflation data this week that could influence the Federal Reserve’s interest rate decision later in January.
On Wednesday, the U.S. Bureau of Labor Statistics will release the more closely watched consumer price index data. The overall data and core data are expected to increase by 0.3% monthly, with annual inflation rates of 2.9% and 3.3% respectively.
While the central bank focuses more on the Commerce Department’s personal consumption expenditures price index as its main inflation gauge, producer price index (PPI) and consumer price index (CPI) readings are also factored into the calculation.
Market pricing overwhelmingly indicates that the Fed will remain on hold at its January 28-29 meeting. However, policymakers, particularly Chairman Powell, can lay the groundwork for where rates will go in the future. Fed funds futures on Tuesday were pricing in just one rate cut for the rest of the year; Bank of America economists said on Monday they believed the Fed was likely to take action this year.
This is breaking news. Please check back for updates.
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