Drop in Wholesale Prices Tied to Low Gas Costs

(CN) – Wholesale prices in the U.S. dropped 0.2 percent in December because of plummeting gas costs, a sign that inflation levels will stay flat in the near future.

FILE- In this Sept. 10, 2018, file photo corn plants shoot out of a forage harvester as farmer Jim Minott works to get some of his 50 acres harvested before impending rain in Brunswick, Maine. Minott will feed the silage to his cows. On Tuesday, Jan. 15, 2019, the Labor Department reports on U.S. producer price inflation in December. (AP Photo/Robert F. Bukaty, File)

According to a Bureau of Labor Statistics report released Tuesday, the producer price index, or PPI, fell slightly last month after a modest increase in November. The PPI is a measure of costs before goods reach consumers.

The drop can be attributed to a 13.1 decrease in wholesale gas prices in December.

The numbers suggest softening inflation pressures. Federal Reserve Chairman Jerome Powell has said the central bank can be “patient” with raising interest rates this year.

Not counting food and energy, the PPI went up 2.7 percent in December. Wholesale prices overall have risen 2.5 percent over the past year, the same 12-month increase that was seen in November.

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Drop in Wholesale Prices Tied to Low Gas Costs

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