Economy

Labor Department PPI Shows Wholesale Inflation Ticking Higher

Wholesale inflation was on the rise in December. The Labor Department released its Producer Price Index (PPI), showing a rise of 0.4% from the prior month and a rise of 1.2% from December 2012. Bloomberg and Dow Jones were both calling for a 0.4% rise.

The good news is that since the time covered, we have already seen oil back off of its highs from $100 at the end of December to $93 or so now. Still, the core PPI, ex-food and energy, was up 0.3% in December, versus expectations of only a 0.1% gain. That translates to a 1.4% annual gain from December of 2012.

Food prices were down by 0.6%, but energy prices were up by 1.6% (gasoline up 2.2%). Inflation numbers such as these may seem higher on the surface, but they are still about half of the threshold that the Federal Reserve has set. Some in the Fed (and outside of the Fed) would actually like to see inflation rise more than it has.

24/7 Wall St. would caution readers that it generally takes more than just one or two months of slightly higher PPI before it translates into higher prices at the register for consumers. Businesses just have a hard time passing on price hikes in many cases, and it often takes a few months of higher prices in the system before the prices trickle down into a noticeable price hike at the register.

Get Ready To Retire (Sponsored)

Start by taking a quick retirement quiz from SmartAsset that will match you with up to 3 financial advisors that serve your area and beyond in 5 minutes, or less.

Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.

Here’s how it works:
1. Answer SmartAsset advisor match quiz
2. Review your pre-screened matches at your leisure. Check out the advisors’ profiles.
3. Speak with advisors at no cost to you. Have an introductory call on the phone or introduction in person and choose whom to work with in the future

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.

AI Portfolio

Discover Our Top AI Stocks

Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.

You can follow him investing $500,000 of his own money on our top AI stocks for free.