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U.S. Producer Prices Fall 0.2% Amid Notable Drop In Food Prices


With food prices showing a notable decrease, the Labor Department released a report on Tuesday showing that U.S. producer prices fell by slightly more than expected in December.

The Labor Department said its producer price index dipped by 0.2 percent in December after falling by 0.8 percent in November. Economists had expected the index to edge down by 0.1 percent.

The drop in producer prices was due in large part to a 0.9 percent decrease in foods prices, which marks the first drop in food prices since May of 2012.

The Labor Department said over one-third of the drop in food prices can be traced to the index for beef and veal, which fell 4.8 percent.

Energy prices decreased by a more modest 0.3 percent in December after tumbling by 4.6 percent in November. Gasoline prices fell by 1.7 percent.

Excluding the decreases in food and energy prices, the core producer price index inched up by 0.1 percent in December.

The increase by the core producer price index, which matched the increase seen in the previous month, came in below economist estimates for 0.2 percent growth.

Compared to the same month a year ago, the headline producer price index was up by 1.3 percent in December, while the core index saw a 2.0 percent annual rate of growth.

Jim O'Sullivan, chief U.S. economist at High Frequency Economics, said, "In short, while weakness in the headline data was exaggerated by declines in food and energy, the underlying trend remains positive but tame."

"Tomorrow's more important CPI will likely show a similar pattern: we forecast 0.0% total and +0.1% core," he added.

Wednesday morning, the Labor Department is scheduled to release its report on consumer prices in the month of December.

by RTTNews Staff Writer

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