US wholesale inflation cools with surprise 0.2% rise
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The news: US producer prices rose 0.2% in December, surprising economists who had forecast 0.4%, as falling food costs and flat services tempered inflation pressures.
The numbers: It comes after the gauge rose 0.4% in November and 0.2% in October. Wholesale prices of vegetables plunged 14.7%, offsetting a 3.5% rise in energy prices, data from the US Bureau of Labor Statistics showed.
Core PPI, excluding food and energy, was unchanged, while annual PPI climbed 3.3%, the highest since February 2023.
Prices for final demand services were unchanged, but airfares surged 7.2% and transportation costs rose 2.2%.
Treasury yields dipped briefly before rebounding, while the S&P 500 rose on the unexpected data.
The context: The data precedes Wednesday’s more closely watched release of the consumer price index, amid heightened inflation expectations spurred by robust demand and the incoming Trump administration’s tariff threats.
The report didn’t change expectations among economists that the Federal Reserve will not cut rates until the second half of the year, with Goldman Sachs predicting two rate cuts later in the year.
What they said: "Better than expected is not necessarily what the Fed wants to see before easing monetary conditions into a fast-growing economy, with tariffs and tax cuts on the agenda of the incoming administration," Carl Weinberg, chief US economist at High Frequency Economics, said.
The sources: US Bureau of Labor Statistics , Reuters
