Wholesale prices increased by 0.2% in December, below the predicted rate.

In December, wholesale prices increased less than expected, indicating that pipeline inflation pressures eased and providing a sign that the year ended with less inflationary pressure.

The producer price index increased by 0.2% in December, which was lower than the 0.4% increase in November and below the Dow Jones consensus estimate of 0.4%, as per a Bureau of Labor Statistics report released on Tuesday.

The core PPI, excluding food, energy, and trade services, only experienced a 0.1% increase, despite forecasts predicting a 0.3% rise.

The increase in gasoline prices by 9.7% led to a 0.6% rise in goods prices. However, this was partially offset by a 14.7% decline in the prices of fresh and dry vegetables.

Despite a 7.2% increase in passenger transportation, prices for traveler accommodation fell, resulting in flat prices on the services side.

The stock market futures rose after the report, while Treasury yields decreased after rising sharply earlier in 2025.

This week's first inflation reading is likely to influence the Federal Reserve's interest rate decision in January.

The BLS will release its closely watched consumer price index reading on Wednesday, which is expected to show 0.3% monthly gains on both the headline and core readings and respective annual inflation rates of 2.9% and 3.3%.

While the central bank prioritizes the Commerce Department's personal consumption expenditures price index as its primary inflation indicator, both PPI and CPI readings are taken into account in that calculation.

The Fed is likely to stay on hold at the Jan. 28-29 meeting, according to market pricing. However, policymakers, including Chair Jerome Powell, could provide insight into future rate decisions. Fed funds futures pricing on Tuesday indicated only one rate cut for the rest of the year, while Bank of America economists predicted the Fed could be done this year.

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