By Manuel Gutierrez, Consulting Economist to NKBA
The Federal Reserve’s aggressive tack with interest rates seems to be working, as producer prices for manufactured goods dropped 2 percent in December, marking the sixth consecutive month of declines. It’s also the biggest drop since August, when prices fell 2.8 percent, and follows a small drop in consumer prices in December.
- Annually, December prices were still 6.9 percent higher than December 2021, but a vast improvement from the first half of 2022, when prices were running at an average of 21 percent higher.
- The December drop was driven by fuel costs, which plunged 7.7 percent against November, although they’re still 12 percent higher YOY.
- Lumber prices were down 1.5 percent for the month — a relief to home builders. In fact, lumber prices across the board have fallen in seven of the last 12 months, and are down 3.8 percent YOY.
- Household appliances rose 1.7 percent for the month and are up 9.5 percent YOY. They peaked at 16.2 percent last June.
- Flooring and window treatments were flat in December compared to November. Flooring is just 1.9 percent higher YOY, but window treatments are up 32 percent from a year ago — the highest annual increase since these records started in the 1980s.
- Household furniture edged up 0.6 percent in December after two months of declines. Prices in the category are 8 percent higher YOY, and increases have been falling since a March peak of 14.7 percent.
