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(Bloomberg) — US wholesale prices rose by more than forecast in December, suggesting companies are increasingly passing on tariff costs at the risk of keeping inflationary pressures elevated.
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The producer price index rose 0.5%, the most in three months, while an underlying gauge that strips out food and energy jumped at one of the fastest rates of the year. The Bureau of Labor Statistics report out Friday also showed that annual price changes picked up, defying economists’ expectations for an easing.
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Services costs jumped as a measure of trade profit margins surged from a month earlier by the most since mid-2024. Much of the increase in that category was due to higher machinery and equipment wholesaling margins. Goods prices, however, were unchanged after rising in the prior month, restrained by cheaper energy.
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The producer price data follow figures out earlier this month that showed underlying consumer inflation rose in December by less than projected. The latest PPI suggests some companies are passing along higher duties on imported materials used in the production process.
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Economists and investors closely track the PPI because several of its components feed into the Federal Reserve’s preferred inflation gauge, the personal consumption expenditures price index.
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Among those categories, costs of portfolio management and domestic airfares rose firmly. Health care services prices were generally tame.
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The Bureau of Economic Analysis is scheduled to release December PCE price data, along with income and spending figures, on Feb. 20.
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After delivering three rate cuts at the end of 2025, the Fed paused on Wednesday, with Chair Jerome Powell noting at a post-meeting news conference that economic activity was solid and the labor market was showing signs of steadying.
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—With assistance from Mark Niquette.
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