Businesses saw the prices of goods they sell rise a record 9.7 percent in 2021, the fastest full-year increase in prices in records going back to 2010.
The Labor Department reported Thursday that its Producer Price Index rose two-tenths of a percentage point in December. That’s a slowdown from November, when prices rose one percent, and October, when prices rose six-tenths of a percentage point.
The 12-month increase in producer price inflation of 9.7 percent was also lower than a revised 9.8 percent increase for the 12 months ending in November. However, the government uses the December to December change for the yearly increase and on that basis the 9.7 percent rise was the fastest annual jump on record, far above the 0.8 percent increase in 2020 and the 1.4 percent rise in 2019.
The Producer Price Index measures prices from the point of view of sellers, in contrast with the better-0known Consumer Price Index’s focus on what households pay for goods and services they purchase. The two indexes tend to move in the same direction, although they can diverge from time to time. The PPI has been indicating more inflation than the CPI through most of the current surge. The headline numbers report “final demand” prices, goods and services sold to businesses, households, and governments for personal consumption, capital investment, public use, or export.
The CPI rose seven percent from December 2020 to December 2021, the highest such inflation rate since 1982.
Core PPI inflation–which excludes food, energy, and trade services–rose 0.4 percent in December following a 0.8-percent increase in November. Core prices are up 6.9 percent since December 2020.
The index for final demand goods moved down 0.4 percent in December, the first decrease since April of 2020. This was led by a 3.3 percent decline in energy prices and a 0.6 percent decline in food prices. Excluding food and energy, the prices of goods rose 0.5 percent.
–The Associated Press contributed to this report.