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Anonymous ID: 90392f Jan. 15, 2020, 12:28 p.m. No.7822801   🗄️.is 🔗kun

U.S. producer prices nudge up as inflation remains benign

 

U.S. producer prices edged up in December as a rise in the cost of goods was offset by weakness in services, the latest indication of tame inflation pressures that could allow the Federal Reserve to keep interest rates unchanged this year. The report from the Labor Department on Wednesday came in the wake of data on Tuesday showing a small rise in consumer prices in December. Inflation has remained tame even as the unemployment rate has dropped to near a 50-year low and the longest economic expansion on record entered its 11th year.

 

“There is still little sign of any significant rise in price pressures at the start of the inflation pipeline, underlining our view that the Fed will keep interest rates on hold for the foreseeable future,” said Andrew Hunter, a senior U.S. economist at Capital Economics in London.

 

The producer price index for final demand ticked up 0.1% last month after being unchanged in November, the government said. In the 12 months through December, the PPI increased 1.3% after gaining 1.1% in November.

 

For all of 2019, the PPI rose 1.3%. That was the smallest gain since 2015 and followed a 2.6% increase in 2018.

 

Economists polled by Reuters had forecast the PPI climbing 0.2% in December and advancing 1.3% on a year-on-year basis.

 

Excluding the volatile food, energy and trade services components, producer prices also nudged up 0.1% in December after being unchanged in November. The so-called core PPI rose 1.5% in the 12 months through December after gaining 1.3% in November. Core PPI increased 1.5% in 2019, also the smallest advance since 2015, after rising 2.8% in 2018.

 

The Fed, which has a 2% annual inflation target, tracks the core personal consumption expenditures (PCE) price index for monetary policy. The core PCE price index rose 1.6% on a year-on-year basis in November, and undershot the Fed’s target in the first 11 months of 2019. December PCE price data will be published later this month.

 

The U.S. central bank last month left interest rates steady and signaled monetary policy could remain on hold at least through this year after it reduced borrowing costs three times in 2019. Inflation could remain tame, with the government reporting last Friday that the annual increase in wage growth retreated to below 3.0% in December even as the unemployment rate held at 3.5% and a broader measure of labor market slack dropped to a record 6.7%.

 

Inflation has been muted despite the United States imposing tariffs on billions of dollars worth of imported Chinese goods. President Donald Trump and Chinese Vice Premier Liu He signed an initial trade deal on Wednesday, a first step toward defusing an 18-month trade war.

https://www.reuters.com/article/us-usa-economy/u-s-producer-prices-nudge-up-as-inflation-remains-benign-idUSKBN1ZE1QZ