Producer Prices Fell 0.1% in December as Commodity Costs Abated
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Data from the Bureau of Labor Statistics Wednesday showed U.S. wholesale prices during the month of December fell 0.1 percent, below economists forecast of a 0.1 percent gain. The negative reading marked the second decline over the past three months.
The price drop was driven by a 0.8 percent decline in both food and energy as vegetable prices fell 11 percent while gasoline prices were 2.3 percent lower. Also notably, the cost of light trucks rose 0.9 percent over the month. Consequently, a core measure of PPI (which excludes these two sectors) rose 0.3 percent.
PPI during November rose 0.3 percent; core prices were up 0.1 percent. December's PPI figure were up 4.8 percent from the same month last year, while the core reading was up 3.0 percent from December of 2010. The rise in the base measure marked the sharpest gain since 2008.
Lower commodity prices in December were a relief for industries which have seen margins almost completely disappear over the past few years. Lower fuel and cotton prices will also help retailers who used extreme discounting and promotions to drive sales this holiday season.
The price drop was driven by a 0.8 percent decline in both food and energy as vegetable prices fell 11 percent while gasoline prices were 2.3 percent lower. Also notably, the cost of light trucks rose 0.9 percent over the month. Consequently, a core measure of PPI (which excludes these two sectors) rose 0.3 percent.
PPI during November rose 0.3 percent; core prices were up 0.1 percent. December's PPI figure were up 4.8 percent from the same month last year, while the core reading was up 3.0 percent from December of 2010. The rise in the base measure marked the sharpest gain since 2008.
Lower commodity prices in December were a relief for industries which have seen margins almost completely disappear over the past few years. Lower fuel and cotton prices will also help retailers who used extreme discounting and promotions to drive sales this holiday season.
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