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Financial News: U.S. Producer Prices Edge Down 0.2% In December

U.S. Producer Prices Edge Down 0.2% In December

01/15/2019 - 09:33:00 (RTTNews)

(RTTNews) - A report released by the Labor Department on Tuesday showed a modest decrease in U.S. producer prices in the month of December.

The Labor Department said its producer price index for final demand dipped by 0.2 percent in December after inching up by 0.1 percent in November. Economists had expected prices to slip by 0.1 percent.

The modest pullback in producer prices was partly due to another steep drop in energy prices, which plunged by 5.4 percent in December after tumbling by 5.0 percent in November.

On the other hand, the report said food prices surged up by 2.6 percent in December following a 1.3 percent jump in the previous month.

Excluding food and energy prices, core producer prices edged down by 0.1 percent in December after climbing by 0.3 percent in November. Core prices had been expected to rise by 0.2 percent.

The unexpected dip in core prices came as service prices slipped by 0.1 percent in December following a 0.3 percent increase in November.

Prices for trade and transportation and warehousing services fell by 0.3 percent and 0.2 percent, respectively, while prices for other services crept up by 0.1 percent.

While producer prices moved modestly lower in December, the annual rate of producer price growth was unchanged from the previous month at 2.5 percent. The annual rate of core price growth was also unchanged 2.7 percent.

"December's drop in the producer price index was mostly an energy story, but there are signs of underlying price pressures moderating too," said Michael Pearce, Senior U.S. Economist at Capital Economics.

Last Friday, the Labor Department released a separate report showing consumer prices edged slightly lower in December, with the modest decrease largely reflecting a steep drop in gasoline prices.

The Labor Department said its consumer price index slipped by 0.1 percent in December after coming in unchanged in November. The slight drop in consumer prices matched economist estimates.

Energy prices showed another significant decrease during the month, plunging by 3.5 percent in December following a 2.2 percent slump in the previous month.

The steep drop in gasoline prices led the way lower, with gas prices plummeting by 7.5 percent in December after tumbling by 4.2 percent in November.

On the other hand, the report said food prices climbed by 0.4 percent in December, the largest increase since May of 2014. Prices for fruits and vegetables surged higher.

Excluding food and energy prices, the core consumer price index rose by 0.2 percent in December, matching the increases seen in the two previous months as well as expectations.

Higher prices for shelter, recreation, medical care, and household furnishings and operations more than offset lower prices for airline fares, used cars and trucks, and motor vehicle insurance.

The report said the annual rate of consume price growth slowed to 1.9 percent in December from 2.2 percent in November, while the annual rate of core consumer price growth was unchanged at 2.2 percent.

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