There appears to be some welcome news on the US inflation front. According to the latest Producer Price Index (PPI) released Tuesday, price hikes on the wholesale level were much tamer than anticipated in December, indicating that inflation might not be reaccelerating as much as feared.
The PPI, which measures the average change in prices paid to US-based producers for goods and services, rose 0.2% from the month before and 3.3% for the year ended in December. A surge in energy costs was the culprit behind the monthly increase, with wholesale energy prices rising 3.5% for the month.
Core PPI, which excludes volatile food and energy prices, held flat from November and held pat at 3.5% annually. Although PPI’s annual rate is at its highest point since February 2023, prices didn’t rise as much as anticipated.
The report may be a “calm before the storm,” cautioned economist Chris Rupkey at FwdBonds, as President-elect Donald Trump has threatened to unleash a series of steep tariffs on key US trading partners, stoking fears that higher costs will be passed along to American consumers.
However, the report shows that some relief may be coming consumers’ way on the egg front. In December, wholesale prices of eggs for fresh use rose just 0.5% from the month before, after soaring 55.6% in November. The average price of a dozen eggs was $4.33 at the end of December, up nearly 25% from the beginning of November.
The December Consumer Price Index (CPI) is due out Wednesday morning and is expected to reflect some of the 55.6% egg price surge seen by producers in November. Economists expect the December CPI to rise 0.3% on a monthly basis and for the annual rate to nudge 0.1 percentage points higher to 2.8%.