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.

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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