Wholesale price growth slowed down in December due to declining inflation

On a monthly basis, the state producer price index fell 0.5% from November to December.

WASHINGTON. US wholesale prices rose 6.2% year-over-year in December, the sixth straight monthly slowdown and a hopeful sign that inflationary pressures will continue to ease.

The latest annual rate is down from 7.3% in November and from a recent peak of 11.7% in March. On a monthly basis, the government said on Wednesday that its producer price index, which measures costs before they reach consumers, fell 0.5% from November to December.

Producer price data may serve as an early indication of where consumer inflation may be heading. The data reflects the prices charged by manufacturers, farmers and wholesalers and flows into an inflation indicator closely monitored by the Federal Reserve: the Personal Consumption Expenditure Price Index.

Rising evidence suggests that inflation in the economy is declining after hitting a four-decade high last summer. At the consumer level, inflation also eased in December for the sixth straight month to 6.5% year-over-year from 7.1% in November.

Wage growth for workers has also slowed, which could further help control inflation. In December, U.S. average wage growth rose 4.6% from 12 months earlier, compared to a recent peak of 5.6% in March.

Over the past year, the Fed has quickly raised its key interest rate in an aggressive attempt to reduce borrowing and spending and curb inflation, which began rising more than a year and a half ago.

The Fed’s rate hikes, in turn, raised the cost of borrowing for consumers and businesses. The average mortgage rate is still almost double the level of a year ago, although it has fallen in recent weeks. The cost of loans to buy cars, credit cards and a number of business loans has also risen sharply.

Although headline inflation is gradually slowing down, costs in some segments of the economy continue to rise. Particularly in the vast service sector, from restaurants and hotels to airlines and entertainment venues, fast-rising wages are fueling broader inflationary pressures.

But many other trends have joined in the inflation slowdown and could eventually lead to the Fed suspending its series of rate hikes. Gas prices, for example, have steadily declined since hitting $5 a gallon in June. They averaged $3.36 a gallon on Wednesday, according to AAA, up slightly from the average a year ago.

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