Wholesale inflation on 3rd month of declines

WASHINGTON — Wholesale inflation in the United States fell for a third straight month in December, further evidence that price pressures in the economy are easing.

The Labor Department reported Friday that its producer price index — which tracks inflation before it reaches consumers — declined 0.1% from November to December after falling 0.1% in November and 0.4% in October. Measured year over year, producer prices rose by a mild 1% in December.

Prices of goods fell 0.4% from November to December, pulled down by a steep 12.4% drop in the wholesale price of diesel fuel. Passenger car prices dropped 3%, and the cost of fresh eggs plunged nearly 21%. In contrast to goods, services prices were unchanged last month.

Excluding volatile food and energy costs, core wholesale prices were unchanged from November and up 1.8% from a year earlier. Core inflation, by omitting prices that tend to fluctuate from month to month, is seen by many economists as a better guide to the direction of inflation.

Friday’s wholesale figures, which were all lower than economists had expected, reinforced the view that U.S. inflation pressures are slowing, if not always consistently. The producer figures, which reflect prices charged by manufacturers, farmers and wholesalers, can eventually influence consumer prices.

After reaching a 40-year high in mid-2022, inflation has slowed sharply in the face of 11 interest rate hikes by the Federal Reserve.

The combination of slowing inflation and a sturdy economy has raised hopes that the Fed can pull off a rare “soft landing” — raising rates enough to tame inflation without tipping the economy into a recession.