Because producer prices are rising at a slower pace, US inflation is also likely to fall further.
(Photo: via REUTERS)
Washington Producers in the USA are no longer turning the screw on prices as vigorously and are thus ensuring less inflationary pressure. Producer prices rose 6.2 percent in December from a year earlier, after a revised 7.3 percent in November, the Labor Department said on Wednesday. Economists surveyed by the Reuters news agency had expected 6.8 percent for December.
The prices apply ex factory gate – i.e. before the products are further processed or traded. Therefore, they are considered an early signal for the development of consumer prices. These rose by 6.5 percent in December after the inflation rate had been 7.1 percent in the previous month.
The Federal Reserve’s stability target of 2.0 percent is still a long way off. For the interest rate decision at the beginning of February, however, the financial markets have adjusted to the fact that the Fed will continue to take its foot off the gas and raise the key monetary policy rate by only a quarter of a percentage point.
In December, it had increased it by half a percentage point – to the current range of 4.25 to 4.50 percent.
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