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Producer price index increased by 0.2%, up more than 6% for 2021

Producer price index increased by 0.2%, up more than 6% for 2021
Traders work on the floor of the NYSE at the opening bell at the New York Stock Exchange on Wednesday. The Labor Department said the producer's price index increased 0.2% in December. Photo by John Angelillo/UPI
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Jan. 13 (UPI) -- The producer's price index rose by 0.2% in December, slower than what economists expected, but it contributed to the fastest increase in prices over a calendar year since 2010, a new report from the Labor Department said Thursday.

The index, which examines the prices received by producers of goods, services and construction for December was half of the 0.4% estimated by Dow Jones.

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It also marks a slowdown in price increases from the previous two months, when the producer price index rose 0.6% in October and 1% in November.

That good news was dampened by a 9.7% jump in prices by the end of the year.

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Prices for final demand less food, energy and trade services -- a key inflation marker closely watched by the Federal Reserve -- increased by 0.4% in December, half of the 0.8% increase in November.

That index increased 6.9% for the 2021 calendar year, up sharply from the 1.3% it increased in 2020. That increase will likely bring market adjustments by the Fed.

"After nearly two years of accommodation, I think we can expect a fair amount of tightening in 2022," Philadelphia Fed President Patrick Harker said Thursday, according to CNBC.

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The report said prices for final demand services rose 0.5% in December, following a 0.9% increase in November.

"Over half of the broad-based advance in December is attributable to margins for final demand trade services, which moved up 0.8%," the report said.

"Prices for final demand services less trade, transportation, and warehousing and for final demand transportation and warehousing services rose 0.2% and 1.7%, respectively," it said.

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The report said that more than a quarter of December's index increase in the index was linked to margins for fuels and lubricants retailing, which rose 13%.

It said that the indexes for airline passenger services, food retailing, machinery and vehicle wholesaling, machinery and equipment parts and supplies wholesaling, and traveler accommodation services all moved higher.

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