producer prices fall in December on declining energy
Send a link to a friend
[January 15, 2016]
WASHINGTON (Reuters) - U.S. producer
prices fell in December as energy prices dropped sharply, a trend that
could temper expectations that inflation will rise this year toward the
Federal Reserve's target.
The Labor Department said on Friday its producer price index slipped
0.2 percent after increasing 0.3 percent in November.
In the 12 months through December, the PPI declined 1.0 percent
after falling 1.1 percent in November. December marked the 11th
straight 12-month decrease in the index.
Producer prices fell 1.0 percent in 2015, the weakest since the
series started in 2010, after rising 0.9 percent in 2014. Economists
had forecast the PPI falling 0.2 percent last month and declining
1.0 percent from a year ago.
Coming on the heels of a report on Thursday showing a steep drop in
import prices in December, weak producer prices suggest that an
anticipated rise in inflation will probably be insufficient to
breach the Fed's 2 percent target.
Inflation, which has been tamed by a strong dollar, tepid wage
growth and cheaper oil, is expected to rise this year as 2015's weak
figures fall out of the calculation. However, persistently low
readings could limit the boost from the favorable so-called base
The inflation outlook will likely determine the timing of further
interest rate increases after the Fed last month raised its key
overnight lending rate by 25 basis points to between 0.25 and 0.50
percent, the first rate hike in nearly a decade.
Last month, the cost of services edged up 0.1 percent after
November's 0.5 percent increase. Energy prices fell 3.4 percent
after dropping 0.6 percent in November. Wholesale food prices fell
1.3 percent after gaining 0.3 percent the prior month.
[to top of second column]
Goods prices fell 0.7 percent, declining for a sixth straight month.
A key measure of underlying producer price pressures that excludes
food, energy and trade services rose 0.2 percent
last month after edging up 0.1 percent in November.
The so-called core PPI was up 0.3 percent in the 12 months through
(Reporting By Lucia Mutikani; Editing by Andrea Ricci)
[© 2016 Thomson Reuters. All rights
Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.