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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.
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.
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.
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.
