US producer prices down the most in more than 2 years

Overall Producer Price Index fell by 0.2% last month after edging up 0.1% in November.

Cows grazing in a field Source: Bloomberg

Producer prices in the United States (US) fell the most in more than two years in December as costs of energy products and trade services fell. The weakness in prices reflect a slower inflation landscape which may allow the US Federal Reserve to take a slower stance on raising interest rates for this year.

Overall Producer Price Index (PPI) fell by 0.2% last month after edging up 0.1% in November, the first decline since February 2017 and the largest fall since August 2016, the Labour Department said in a report on Tuesday night. Year-on-year, overall PPI rose by 2.5%, matching November’s increase.

Experts in a Bloomberg survey had expected a 0.1% drop for overall PPI and a 2.5% increase from a year ago.

Excluding food and energy, producer prices decreased 0.1% from the previous month, the first decline in a year. Year-on-year core producer prices rose by 2.5%.

Fed Chairman Jerome Powell said last week that low inflation afforded policymakers 'the ability to be patient and watch patiently and carefully' while they monitored economic data and financial markets for risks to growth. The US central bank has forecast two rate increases for 2019.

The PPI measures wholesale prices and other selling costs from business to business, and the latest month’s prices indicate that the prices are only gradually firming up.

The PPI for wholesale energy prices fell by 5.4% from November, due to a 13.1% fall in gasoline prices. Wholesale food prices were up by 2.6%, rising from the 1.3% increase in November.

PPI for services dipped 0.1%, making it the first decline in four months, due to narrower margins received by retailers and wholesalers for trade services.


This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

See an opportunity to trade?

Go long or short on more than 16,000 markets with IG.

Spread bet and trade CFDs on our award-winning platform, with low spreads on indices, shares, commodities and more.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Bid
Offer
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Bid
Offer
Updated
Change
Bid
Offer
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Sunday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.


For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of spread betting and CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.