FXstreet.com (Barcelona) - Producer prices index has edged down in December, following a strong increase in November, due mainly to a decrease on gasoline prices , although the yearly increase has been the largest of the last 25 years, according to data by the US Department of Labour.
Producer prices have decreased 0.1% in December from November, after a 3.2% rise in November, excluding food and energy, producer prices have gone 0.2% up, below the 0.4% increase posted in November.
Year on year the PPI increased 6.3, the largest rise since the ear 1981, while except food and energy, the Core PPI rose 2.0%. Ian Shepherdson, Chief U.S. Economist at High Frequency Economics, Ltd the pressure on the core PPI is fading away: The pressure on core PPI is now fading; the slowing in the rate of increase of core raw materials prices - now up 16.8% y/y, compared to the mid-06 peak of 36.3% - means that core PPI inflation will be well below 2% a year from now.
On the general PPI, Shepherdson affirms that inflationary pressures will come from energy and not from domestically made goods: There is no inflation threat in domestically produced goods prices. The rise in food and energy prices is a threat only if people are able to extract compensating wage gains, but hourly wage increases have been slowing for a year. Plenty of room to ease.