US wholesale prices up 0.3% with biggest jump in ‘energy’
Holiday sales up 8.3% amid big spending shift: retail group
WASHINGTON, Jan 17, (AP): US wholesale prices rose 0.3% in December led by a the biggest jump in energy costs since June.
The Labor Department reported Friday that the gain in its producer price index, which measures inflation pressures before they reach consumers, followed a modest 0.1% gain in November and matched the 0.3% rise in October.
The December increase reflected a 5.5% surge in energy costs, the biggest gain since a 9.6% jump in June. That offset a 0.1% drop in food costs, the first decline since August.
Gasoline prices rose 16.1% in December and accounted for nearly half of the increase in goods prices last month.
Over the past 12 months, inflation at the wholesale level has risen a modest 0.8%. The government reported Wednesday that consumer inflation was also well-behaved last year, rising just 1.4% over the past 12 months.
These low inflation reading are giving the Federal Reserve room to keep interest rates at ultra-low levels in an effort to help lift the economy out of a pandemic-induced recession. Inflation has remained below the Fed’s 2% annual target for much of the past decade.
Inflation
“Inflation is still largely a no-show,” said Mahir Rasheed, an economist with Oxford Economics. “While some sectors have seen prices start to heat up, broader inflation measures continue to fall short of the Fed’s 2% goalpost as the economy entered the new year in a slump.”
Meanwhile, the nation’s largest retail trade group said Friday that holiday sales soared 8.3%, far exceeding its forecast even as the coronavirus kept shoppers away from physical stores.
The National Retail Federation had expected growth in a range of 3.6% to 5.2% for the November and December period compared to the year-ago period.
The outsized gains show how the pandemic has caused a major shift in spending away from restaurants and travel and more toward buying goods that focus on activities around the home like home furnishings, food and activewear. That trend has benefited retailers. The retail sales figures exclude sales from autos, restaurants and gas.
Moreover, even within the retail industry, big box stores like Walmart and Target are dominating the landscape, enjoying big sales gains at the expense of mall-based stores that were forced to temporarily close during the spring and early summer and still face restrictions. Shoppers are consolidating their trips and favoring stores that offer a wide range of goods under one roof as they look to minimize the exposure of the virus.
The National Retail Federation also said that shoppers are looking for opportunities to celebrate during tough times.
“Faced with rising transmission of the virus, state restrictions on retailers and heightened political and economic uncertainty, consumers chose to spend on gifts that lifted the spirits of their families and friends and provided a sense of normalcy given the challenging year, ” said Matt Shay, CEO of the trade group, in a statement.