US producer inflation cooler than expected in December

US producer inflation rose less than analysts expected in December, according to government data released Tuesday, on the back of cooler food costs.

The producer price index (PPI) rose 0.2 percent last month, said the Department of Labor, below a consensus estimate of 0.4 percent according to Briefing.com.

The move will likely bring some relief to markets, with observers monitoring the progress of lowering inflation -- given that this has a bearing on central bank policy.


On Tuesday, the Labor Department noted that December's increase could be traced to an advance in the index for goods.

But excluding food, energy and trade services, the index picked up just 0.1 percent last month, holding steady from November's rate.

Compared with the same period a year ago, PPI was up 3.3 percent in December, up from 3.0 percent in November.

Federal Reserve officials have been showing caution as they mull the pace of interest rate cuts, keeping a keen eye on progress when it comes to lowering inflation sustainably.

A lower-than-expected reading could give policymakers more confidence in proceeding with cuts.

Looking ahead, analysts will be eyeing the consumer inflation report due midweek.