WASHINGTON: US wholesale inflation slipped in December, the first decline in 16 months, mostly due to falling services prices, the government reported Thursday.
The Producer Price Index, which tracks the costs of wholesale goods and services, slipped 0.1 percent in the final month of the year, seasonally adjusted, after posting five-year highs in each of the previous two months.
Economists had expected the PPI to rise 0.2 percent.
For all of 2017, producer prices were 2.6 percent higher than the previous year.
The retreat in December was driven by a 0.2 percent decline in services prices, while goods prices were flat.
The biggest declines were seen in fuels and lubricants which dropped 10.7 percent; as well as loan services and airline passenger services, the Labor Department said in the report.
However, analysts note the services component can be volatile. They will be watching for the consumer price index for December, which the Labor Department is due to release Friday, to see if it contradicts the PPI data.
Excluding the more volatile food and fuel categories, PPI rose 0.1 percent in December, and was up 2.3 percent for the year, compared to the 1.8 percent increase in 2016.
"The underlying trends in core PPI goods and services inflation are still rising, and some components, notably apparel, point to clear upside risk in their CPI equivalents," Ian Shepherdson of Pantheon Macroeconomics said in a research note.
The Federal Reserve watches inflation indicators closely, especially at the consumer level, and officials were baffled by persistently weak inflation through much of 2017, especially in the face of falling unemployment, even as they raised the benchmark lending rate three times.
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