US wholesale prices unexpectedly fell in December

US wholesale prices defied predictions to edge lower in December last year, according to government data published Wednesday, due largely to another sharp drop in the energy index.

The producer price index (PPI) fell 0.1 percent in December, following a similar revised decline in November, the Labor Department announced in a statement.

This was below market expectations of a slight increase, according to Briefing.com.


Stripping out food, energy, and trade, PPI increased by 0.2 percent month-on-month.

"Looking through monthly movements, the data show significant progress on producer prices from rates of change a year earlier," High Frequency Economics chief US Economist Rubeela Farooqi wrote in a note to clients.

The PPI index rose 1.0 percent in the 2023, a significant slowdown from the 6.4 percent rise seen a year earlier.

This is likely to be seen as good news at the US Federal Reserve as policymakers continue their fight against consumer inflation, since higher producer prices can increase costs for consumers.

"For the Fed, today's figures support the view that the policy rate is at a peak and the Fed's next move will be to cut rates," Farooqi said.

The overall decline to headline PPI in December was spurred by a drop in final demand goods of 0.4 percent in December, much of it down to a 1.2 percent fall in prices for final demand energy, and a smaller decline in final demand foods.

Final demand services were flat overall.