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Saturday, July 13, 2024
HomeNewsEconomyProducer Price Index (PPI) Posted Sharpest Decline In 3 Years

Producer Price Index (PPI) Posted Sharpest Decline In 3 Years

producer prices and Ford factory worker
producer prices and Ford factory worker

Producer prices reported by the Labor Department. A Ford Factory worker on the assembly line. (Photo: REUTERS)

The Labor Department reported Thursday its producer price index (PPI) declined 0.3 percent in December, the biggest drop since October 2011, after falling 0.2 percent in November.

Economists polled by Reuters had forecast the PPI dropping 0.4 percent in December and increasing 1.0 percent from a year ago.

Excluding the food and energy components, prices rose 0.3 percent in December, compared to economists’ expectations of 0.1 percent increase. Last month, wholesale energy prices dropped a record 6.6 percent after falling for six straight months, fueled by falling crude oil prices, weakening global demand and increased shale production in the United States.

A broader measure of underlying producer inflation pressure — which excludes food, energy and trade services — actually increased 0.1 percent last month, after being flat the month prior. In the 12 months through December, it was up 1.3 percent.

The index comes as the Federal Reserve is deciding its next step on monetary policy, though experts expect the policy-making committee to begin to raise rates in June, or mid-2015.

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PPD Business, the economy-reporting arm of People's Pundit Daily, is "making sense of current events." We are a no-holds barred, news reporting pundit of, by, and for the people.

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