Wholesale prices up 0.2% in December, less than expected but still a new full-year record

The Labor Department said Thursday that wholesale prices rose less than expected in December, but still set a new standard at a time when consumer inflation is running at a nearly 40-year high.

The producer price index, which measures prices received by producers of goods, services and construction, was up 2% for the month.

The index was up 9.7% on a 12-month basis to end the year, the highest increase ever in data going back to 2010.

The two previous months had gains of 0.6% and 1%.

Initial jobless claims for the week ended January 8 totaled 230,000, well above the 200,000 estimate and a significant increase from the previous week.

The trajectory for unemployment was not as high.

Continuing claims fell by 194,000 to 1.56 million, the lowest level in 43 years.

The unemployment rate fell to 3.9% in December, and markets have been focused on inflation. The consumer price index, which measures prices paid at checkout for a swath of everyday goods and services, rose 7% year over year, the biggest 12-month gain since June 1982.

Excluding food, energy and trade, the core price index increased 0.4% for the month.

Final-demand prices for food and energy both fell during the month. The costs of transportation and warehousing were up.

The goods prices fell on the month but that was offset by a rise in services. The surge in consumer inflation can be attributed to the stronger demand for goods.

There was some seasonal noise left over from the holidays that led to a rise in unemployment claims. There was a large increase in the number ofusted claims for the week.

The four-week average for claims increased by 6,250 from the previous week, but were still below the pre-pandemic level.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote that the drop in claims in November was flattered by favorable seasonals. The seasonal issues will last for another week or two, after which we expect claims to drop towards new cycle lows. The data late last fall appeared to suggest that the trend was heading south.

Labor force participation is well below the February 2020 pre- Covid levels and as enhanced and extended benefits expired, the largely downward trend in claims has come.

The total employment level is almost 3 million below where it was before the epidemic, and the labor force level is less than 2.3 million.