Wholesale Inflation Slowed in December to 6.2 percent

WASHINGTON — Wholesale prices in the United States rose 6.2 percent in December from a year earlier, a sixth straight slowdown and a hopeful sign that inflation pressures will cool, even as price increases extend a streak not seen in four decades.The latest year-over-year figure was down from 7.3 percent in November and from a recent peak of 11.7 percent in March. On a monthly basis, the government said Wednesday that its producer price index, which measures costs before they reach consumers, dropped 0.5 percent to December from November.The producer price data can provide an early sign of where consumer inflation might be headed. The data reflects the prices that are charged by manufacturers, farmers and wholesalers, and it flows into an inflation gauge that the Federal Reserve closely tracks, the personal consumption expenditures price index.The ongoing slowdown in wholesale price growth is adding to evidence that the worst bout of inflation in four decades is steadily easing, though it remains far above the Federal Reserve’s target of 2 percent.Last month’s drop was led by gas prices, which sank 13.4 percent between November and December. Gas prices averaged $3.36 a gallon Wednesday, according to the American Automobile Association, down from a peak of $5 a gallon in mid-June.Food prices fell by a sharp 1.2 percent, led by fruits, vegetables and chicken. One exception was egg prices. Driven up in part by a wave of avian flu, egg prices soared 25 percent just between November and December.Excluding volatile energy and food costs, so-called core producer prices rose only 0.1 percent in December over the prior month. Measured year over year, core prices increased 5.5 percent in December, compared with 6.2 percent in November.“The big picture is one of rapid disinflation, with much more to come,” said the chief economist at Pantheon Macroeconomics, Ian Shepherdson.Producer prices in the nation’s vast service sector — everything from restaurants and hotels to airlines and entertainment venues — ticked up just 0.1 percent in December, the smallest monthly increase since last April. The Fed has been monitoring this area of the economy in particular as it assesses its progress in combating high inflation.But rising evidence shows that inflation across the economy is easing after having reached a four-decade peak last summer. At the consumer level, inflation also cooled in December for a sixth straight month to 6.5 percent compared with a year earlier, from 7.1 percent in November.An acceleration in workers’ wages has been slowing, too, which could further help control inflation. In December, average wage growth in the United States was up 4.6 percent from 12 months earlier, compared with a recent peak of 5.6 percent in March.Over the past year, the Fed has rapidly raised its key interest rate in an aggressive drive to cool borrowing and spending and tame inflation, which began surging more than a year and a half ago.The Fed’s rate hikes have, in turn, led to higher borrowing costs for consumers and businesses. The average mortgage rate is still nearly twice its level a year ago, though it has dipped in recent weeks. Loan costs for auto purchases, credit cards and a range of business borrowing are up sharply, too.Even as overall inflation could be gradually slowing, costs are surging in some pockets of the economy. Particularly in the service sector, wage growth is still contributing to broader inflation pressures.Associated Press

Wholesale Inflation Slowed in December to 6.2 percent

Wholesale Inflation Slowed in December to 6.2 percent

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