Customers shop for clothes at a Costco store on December 11, 2024 in Novato, California.
Justin Sullivan | Getty Images
A measure of wholesale prices rose less than expected in December, providing a signal that pipeline inflation pressures have eased towards the end of the year.
The producer price index rose just 0.2% month-over-month, less than the 0.4% increase in November and below the Dow Jones estimate of 0.4%, according to a report. Bureau of Labor Statistics report Tuesday.
Excluding food and energy, the core Producer Price Index was flat compared to expectations for a 0.3% rise. Excluding food, energy and trade services, the index rose only 0.1%.
Commodity prices rose by 0.6%, driven by a 9.7% rise in gasoline prices. Upward movements in several food and energy-related measures were offset by a 14.7% decline in fresh and dry vegetable prices.
On the services side, prices remained stable, despite a 7.2% increase in passenger transport, which was offset by a decrease in passenger accommodation prices.
Stock market futures contracts It rose after the report while Treasury yields fell after rising sharply in the first days of 2025.
The release is the first of two key inflation readings this week that will likely influence the Fed's interest rate decision later in January.
On Wednesday, the BLS will release its most closely watched CPI reading. This is expected to show monthly gains of 0.3% on both headline and core readings and annual inflation rates respectively of 2.9% and 3.3%.
Although the central bank focuses more on the Commerce Department's Personal Consumption Expenditures Price Index as its main measure of inflation, the Producer Price Index and CPI readings factor into this calculation.
Market prices overwhelmingly point to the Fed remaining in a hold mode at its January 28-29 meeting. However, policymakers, and Chairman Jerome Powell in particular, can lay the groundwork for what is to come regarding interest rates. Federal funds futures pricing on Tuesday indicated only one rate cut during the rest of the year. Economists at Bank of America said Monday they believe the Fed could do that this year.
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