The Producer Price Index (PPI), which measures inflation on the wholesale level, fell 0.1% in December, coming in below the expected 0.1% rise. On an annual basis, PPI rose from an anemic 0.8% to 1%, also lower than expected. Core PPI, which strips out volatile food and energy prices, was flat for the month with the year-over-year reading down from 2% to 1.8%.
What’s the bottom line? This latest PPI report is another encouraging sign that inflation is easing, with December’s 1% year-over-year reading a sharp drop from 2022’s 11.7% peak. Plus, lower producer inflation often leads to lower consumer inflation if these savings are passed on to consumers.