US producer prices rose 0.2% last month on higher energy costs

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U.S. wholesale inflation rose last month on higher energy prices

WASHINGTON — U.S. wholesale inflation rose last month on higher energy prices.

The Labor Department reported Tuesday that its producer price index — which tracks inflation before it hits consumers — rose 0.2% last month from November, down from a 0.4% gain the month before. Compared to a year earlier, producer prices were up 3.3%, biggest jump since February 2023 and up from a 3% gain in November.

A 3.5% November-to-December increase in energy prices — led by a 9.7% increase in gasoline prices — pushed the overall index higher. Food prices dipped 0.1% in December.

Still, the overall increases were slightly less than economists had forecast. U.S. markets leapt higher immediately on the new inflation data.

Excluding food and energy prices, so-called core wholesale inflation was unchanged from November but up 3.5% from a year earlier.

The producer price report came out a day before the Labor Department reports on consumer prices. Its consumer price index is expected to rise 0.3% from November and 2.8% from December 2023, according to a survey of forecasters by the data firm FactSet.

Wholesale prices can offer an early look at where consumer inflation might be headed. Economists also watch it because some of its components, notably health care and financial services, flow into the Federal Reserve’s preferred inflation gauge — the personal consumption expenditures, or PCE, index.

Inflation flared up in early 2021 as the economy rebounded with unexpected strength from COVID-19 lockdowns, overwhelming factories, ports and freight yards and leading to shortages, delays and higher prices.

In response, the Fed raised its benchmark interest rate — the fed funds