Wholesale prices rose less than expected in December, a positive sign for the economy as inflation concerns persisted. The Bureau of Labor Statistics reported a 3.3% increase in producer price index (PPI) from last year, below the 3.5% economists had projected.
Excluding food and energy, core prices rose 3.5% year-over-year, beating November’s 3.4% gain. However, month-over-month core prices remained unchanged, contrary to expectations of a 0.3% increase.
Economists welcomed the news, but noted that it masks some price jumps in key components, including airfare. Morgan Stanley adjusted its core PCE inflation forecast for December, predicting a 0.23% monthly increase.
The release coincides with the expected Consumer Price Index (CPI) report on Wednesday, which is anticipated to show little progress in core inflation. Economists believe this news may temper expectations for future rate cuts.
Markets currently price a low chance of the Federal Reserve cutting interest rates at its January meeting, with only a 3% chance, according to the CME FedWatch Tool.
Source: https://finance.yahoo.com/news/ppi-shows-wholesale-inflation-increased-less-than-expected-in-december-133720234.html