Prices for wholesale goods and services fell sharply in December, providing another sign that inflation has begun to ease.
The producer price index, which measures final demand prices based on hundreds of categories, declined 0.5% for the month, the Labor Department reported on Wednesday. Economists polled by Dow Jones had been looking for a 0.1% decline.
Excluding food and energy, the core PPI measure rose 0.1%, in line with estimates.
A sharp drop in energy prices helped lower the inflation reading for the month. The PPI final demand energy index plunged 7.9% in the month. In that category, wholesale gasoline prices fell 13.4%. The final demand food index also fell, declining 1.2%.
Inflation readings for the future may be less certain, as the cost for a gallon of gas is up about 21 cents from last month, and crude oil prices are up about 1.6% so far in January.
However, the general trend in inflation shows slightly lower readings. The consumer price index fell 0.1% in December, although it was still up 6.5% from a year ago. Meanwhile core CPI was 5.7% excluding food and energy. The CPI measures the prices consumers pay in the market, while the PPI measures what businesses pay for goods and services.
The drop in prices was also reflected in another economic report released on the same day.
Retail sales fell 1.1% in December, falling slightly more than forecasts of 1%. The numbers are not adjusted for inflation, so the latest reading reflects both subdued inflation and weak consumer demand during the holiday shopping season.
