WASHINGTON – U.S. wholesale prices rose 0.3% in December led by a the biggest jump in energy costs since June.
The Labor Department reported Friday that the gain in its producer price index, which measures inflation pressures before they reach consumers, followed a modest 0.1% gain in November and matched the 0.3% rise in October.
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The December increase reflected a 5.5% surge in energy costs, the biggest gain since a 9.6% jump in June. That offset a 0.1% drop in food costs, the first decline since August.
Gasoline prices rose 16.1% in December and accounted for nearly half of the increase in goods prices last month.
Over the past 12 months, inflation at the wholesale level has risen a modest 0.8%. The government reported Wednesday that consumer inflation was also well-behaved last year, rising just 1.4% over the past 12 months.
These low inflation reading are giving the Federal Reserve room to keep interest rates at ultra-low levels in an effort to help lift the economy out of a pandemic-induced recession. Inflation has remained below the Fed’s 2% annual target for much of the past decade.
“Inflation is still largely a no-show,” said Mahir Rasheed, an economist with Oxford Economics. “While some sectors have seen prices start to heat up, broader inflation measures continue to fall short of the Fed's 2% goalpost as the economy entered the new year in a slump.”