WASHINGTON: Wholesale prices for US goods and services surged to a record last year amid the supply snarls that have battered the global economy, but data released Thursday showed the inflation pressures eased in December.
The producer price index (PPI) jumped 9.7 percent in 2021, the largest calendar-year increase since the data was first calculated in 2010, the Labor Department reported.
But PPI in the final month of the year gained just 0.2 percent compared to November, its slowest increase in over a year and half and less of a jump than economists were expecting, due to a 0.4 percent decrease in the cost of goods.
The data follows the government report on consumer prices released Wednesday showing the biggest annual increase in nearly four decades, fueled by jumps in prices for cars, housing and food.
However, at the producer level, energy prices dropped 3.3 percent and food prices also declined, the data showed.
US inflation is apt to disappoint and dollar dip
"Producer prices ended the year on an encouraging note, rising less than expectations as both the headline and core PPI moderated in December," said Mahir Rasheed of Oxford Economics.
The Covid-19 pandemic has created shortages of critical goods like computer chips for cars while transportation snags have further fanned the inflation flames as new strains of the virus cause additional business disruptions.
"Persistent supply disruptions will pin producer prices near record levels in the near term, especially given a rapidly spreading Omicron variant that will fan inflation pressures," Rasheed said.
Federal Reserve officials have made clear that fighting the wave of price increases will be a priority, and many economists now expect the central bank to raise the benchmark interest rate as soon as March.
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