After more than two years of sharply increasing prices throughout the wholesale supply chain, the Labor Department reported Friday an unexpected decline in December prices.
The producer price index (PPI), a measure of the prices that companies get for finished goods in the marketplace, fell 0.1% in November after prices were flat in November.
Year-over-year, the PPI rose 1% after a 0.9% increase in December. PPI peaked at an 11.5% year-over-year gain in March 2022 and finished 2022 with a 6.4% year-over-year increase.
Year-over-year prices declined from 2022 levels in three of the four supply-chain stages. Only Stage 4, measuring the products purchased by industries primarily producing output sold to final demand, such as RV manufacturers, saw 2023 prices increase from 2022 levels.
PNC Senior Economist Kurt Rankin said, “What inflation risks remain in the U.S. economy clearly cannot be sourced to any upward pressure in producers’ costs. Whether surveying from producers’ intermediate or final demand perspective, there is little to no pricing pressure headed into the U.S. economy from the supply side entering 2024.”
Goods inputs fell from the previous month in three of the four supply-chain stages. The fourth stage was flat from the previous year.
Stage 4 goods inputs were flat in December after a revised 0.1% decline in November. Overall, Stage 4 intermediate demand rose 2.1% year-over-year after a 5.9% increase in 2022.
Goods inputs for Stage 3 intermediate demand, measuring suppliers to Stage 4 producers such as RV manufacturers, fell 1.4% in December after a revised 1.2% decline in November. Overall, year-over-year Stage 3 demand fell 2.4% year-over-year after a 5.1% increase in 2022. December marked the 10th consecutive month of year-over-year price decreases.
Goods inputs for Stage 2 intermediate demand, measuring suppliers to Stage 3 suppliers, fell 4.1% in December after a revised 2.4% decline in November. November’s decline is the largest monthly decline since March. Overall, Stage 2 intermediate demand dropped declined 5.5% year-over-year after a 7.7% increase in 2022.
Finally, goods inputs for Stage 1 demand fell 0.9% after a revised 0.5% decline in November after a revised 0.8% decline in October. Overall, demand declined 0.2% year-over-year after a 5.4% increase in 2022. December marked the ninth consecutive month of year-over-year declines.
