U.S. producer prices rise by most in five months in December

The Producer Price Index rose 0.5% in December, the largest monthly gain since July, driven mainly by a 0.7% increase in services while goods prices were unchanged.

U.S. producer prices rose 0.5% in December, the biggest monthly increase since July, driven largely by higher service-sector costs and trade margins. The Labor Department reported that services, including trade services, hotel room wholesale prices and airline fares, were the main contributors while goods prices were unchanged. The report follows a Federal Reserve decision to keep its policy rate at 3.50–3.75 percent and comments noting tariff effects on prices. Market moves following the report included lower U.S. stocks, a stronger dollar, and higher Treasury yields. Key details: - The Producer Price Index for final demand increased 0.5% in December, after a 0.2% gain in November. - On a 12‑month basis, the PPI rose 3.0% through December, matching November's year‑on‑year change. - Services rose 0.7% in December, led by a 1.7% jump in margins for final demand trade services. - Producer goods prices were unchanged for the month; excluding food and energy, producer goods advanced 0.4%. - Airline fares increased 2.9% and wholesale prices of hotel and motel rooms surged 7.3%. - Energy prices fell 1.4% and food prices declined 0.3%, including a 20.4% drop in fresh and dry vegetables, which was reported as likely reflecting some tariff rollbacks. Summary: The December PPI increase points to upward pressure on inflation that is concentrated in services and trade margins. The Federal Reserve recently left its policy rate unchanged and officials have cited tariff effects as a contributor to recent price moves. The Personal Consumption Expenditures inflation reading for December is scheduled for release on Feb. 20, which will provide additional information on consumer inflation trends.