Following the cooler than expected Consumer Price Inflation, Producer Prices came in considerably hotter than expected at the headline level in December. PPI rose 0.5% MoM (vs +0.2% MoM exp), lifting headline PPI to +3.0% YoY.
Source: Bloomberg
Services costs dominated the rise in the headline PPI (not Goods – which would be affected by tariffs).
Services costs jumped as a measure of trade profit margins surged by the most since mid-2024.
Much of the increase in that category was due to higher machinery and equipment wholesaling margins.
Goods prices, however, were unchanged after rising in the prior month.
Source: Bloomberg
Core PPI (ex Food and Energy) surged even more – up 0.7% MoM (vs +0.2% MoM exp), pulling the core up 3.3% YoY…
Source: Bloomberg
That is the biggest MoM jump since July 2025 (and second biggest MoM jump since March 2022) and the YoY figure is inflecting higher.
While elevated relative to the Fed’s mandate, there remains no sign of the runaway tariff hyperinflation that Democrats had ‘priced in’ to their survey responses (and establishment economists were convinced were imminent).
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