Producer Prices Increased 0.4% For December --- But Most Analysts Blame Temporary Jump Posted By Food, Energy Items
WASHINGTON -- The Labor Department's December report on producer prices indicates that inflation remains well under control at the start of the new year.</br></br>The index of producer prices for finished goods rose a substantial 0.4% during the month, or 4.5% at a compounded annual rate, the Labor Department said. But like the larger increases in October and November, the December rise reflected a bulge in food and energy prices that most analysts believe is temporary. Excluding food and energy, producer prices held steady in December.</br></br>"We're entering the year on a very good note," said Joel Popkin, an economic consultant here. "These numbers certainly suggest there is a lot of room to grow before we face inflationary pressures."</br></br>Despite the price bulge during the last three months of the year, the producer price index in December stood only 1.8% above its year-earlier level.</br></br>Some forecasters have predicted that the roughly 20% drop in the dollar's exchange value since last February will cause inflation to accelerate by raising the prices of imports. But the latest producer price figures make it clear that, so far, the dollar's fall is having little effect on prices.