December Producer Price Index

Prices paid by producers and wholesalers were firmly higher in December but remained tame on a year-over-year basis. The uptick of 0.4 percent was the largest monthly increase since June. Year-over-year, the Bureau of Labor Statistics’ Producer Price Index (PPI) has increased 1.2 percent which is the largest annual increase since August.

Energy led the indicator higher in December as a particularly cold month settled over a large portion of the nation. Energy alone was up 1.6 percent. Food offset some of this uptick by falling 0.6 percent in the period. Core PPI (which removes food and energy) was up 0.3 percent during the final month of the year.

Both of the earlier stages of production reversed direction in the period. Intermediate goods (think flour) were 0.6 percent more expensive in December. This followed two months of declines in October and November. Crude goods (think wheat) followed a similar pattern. After falling in the prior two months, including 2.6 percent in November, they were up 2.4 percent to end the year.

There are still very few signs of inflation in the U.S. economy. The earlier stages did produce relatively large upticks for the month, but they will need to be more persistent than one month to get Atlas’ attention. The year-over-year rate coupled with December’s low monthly uptick for the headline and core PPI tallies are not signaling price pressures at this time. (by C. Cox)