US Producer Prices Increased 0.2% Last Month Due to Rising Energy Costs

Washington: So, the latest news is that U.S. wholesale prices went up by 0.2% last month. This bump is mainly due to higher energy prices, especially gasoline. The Labor Department shared that the producer price index, which shows inflation before it hits consumers, had a smaller increase than the previous month.

Energy prices jumped by 3.5% from November to December, with gasoline seeing a hefty 9.7% rise. On the flip side, food prices dipped a bit, down by 0.1%. Even though the overall increase was less than what experts expected, the stock market reacted positively to the news.

When we look at core wholesale inflation, which excludes food and energy, it stayed steady from November but was up 3.5% compared to last year. This report came just before the Labor Department’s consumer price report, which is also anticipated to show a rise.

Wholesale prices can give us a sneak peek into future consumer inflation. Economists keep an eye on these numbers because they can influence the Federal Reserve’s decisions on interest rates. Inflation really took off in early 2021 as the economy bounced back from COVID-19, causing all sorts of supply chain issues.

In response, the Fed raised interest rates multiple times in 2022 and 2023. While inflation has come down from its peak, it’s still above the Fed’s target. Recently, Fed officials hinted they might be more cautious about cutting rates this year, projecting fewer reductions than before.

There are also concerns about how President-elect Donald Trump’s plans for tariffs and tax cuts could affect inflation. Some economists believe the Fed won’t feel the need to lower rates anytime soon, especially with the current economic conditions.