Data released Friday by the US Bureau of Labor Statistics showed the Producer Price Index (PPI) for final demand climbed 0.5 per cent in December, seasonally after a 0.2 per cent rise in November. Economists polled by Reuters had forecast a 0.2 per cent increase.
On a year-on-year basis, producer prices advanced 3 per cent in 2025, matching November’s annual gain.
The upside surprise was almost entirely services-led.
The index for final demand services jumped 0.7 per cent in December, the largest increase since moving up 0.9 per cent in July. Two-thirds of the broad-based rise was traced to a 1.7 per cent surge in margins for final demand trade services — a category that measures changes in margins received by wholesalers and retailers.
More than 40 per cent of the services increase came from a 4.5 per cent rise in margins for machinery and equipment wholesaling, the data said. Prices also rose for guestroom rentals, food and alcohol retailing, portfolio management and airline passenger services.
Within goods, nonferrous metals prices climbed 4.5 per cent, while diesel fuel plunged 14.6 per cent, tempering the overall goods index.
The data comes against the backdrop of sweeping import tariffs introduced by President Donald Trump.
Federal Reserve Chair Jerome Powell this week said that tariffs had contributed to the recent inflation overshoot. “There’s an expectation that sometime in the middle quarters of the year we’ll see tariff inflation topping out,” Powell said after the Fed left its benchmark interest rate unchanged in the 3.50–3.75 per cent range on Wednesday.
Prices for unprocessed goods for intermediate demand jumped 2.3 per cent in December, led by a 34.8 per cent surge in natural gas. In contrast, processed goods edged down 0.1 per cent, weighed by falling energy prices.
Services for intermediate demand rose 0.7 per cent, mirroring the strength seen at the final demand level.
For 2025 as a whole, the final demand index rose 3.0 per cent, slower than the 3.5 per cent increase recorded in 2024.
