The latest PPI report inflation today shows that wholesale prices rose less than expected in December, a positive sign for the U.S. economy. According to the Bureau of Labor Statistics (BLS), the Producer Price Index (PPI), which measures price changes businesses face, increased by 3.3% compared to December last year. This was slightly higher than November’s 3% but lower than the 3.5% that economists had predicted.
On a monthly basis, prices rose by just 0.2%, below the 0.4% increase experts expected. Excluding food and energy costs, “core” prices rose by 3.5% over the year, slightly more than November’s 3.4%. However, monthly core prices remained unchanged, surprising economists who had forecast a 0.3% rise.
This PPI report on inflation today provides some relief ahead of the Consumer Price Index (CPI) release, which is expected to show core inflation holding steady at 3.3% for the fifth month in a row.
Experts React to the PPI report inflation today
Economists at Morgan Stanley revised their December inflation forecast, now predicting core prices rose 0.23% month-over-month, slightly above their earlier estimate of 0.21%.
Ben Ayers, a senior economist at Nationwide, commented that the softer-than-expected PPI report on inflation today could ease concerns about inflation ahead of the CPI release.
However, the Federal Reserve is unlikely to adjust interest rates soon. Market data from the CME FedWatch Tool shows only a 3% chance of a rate cut in January, though rate cuts may be more likely by mid-year if inflation trends downward.
Despite the encouraging data, challenges remain. Airfare prices and other costs that affect the Fed’s preferred inflation measure—the Personal Consumption Expenditures (PCE) index—continued to rise in December.
FAQs
How does the PPI affect the economy?
A lower-than-expected PPI suggests inflation may be slowing, reducing the pressure on the Federal Reserve to raise interest rates. This can lead to more stable prices for businesses and consumers.
What is the PPI report, and why is it important?
The PPI report on inflation today measures the average change in prices businesses receive for their products and services. It’s an early indicator of inflation and helps predict future trends for consumer prices.
