Prices at the wholesale level fell in December from the month before, the biggest drop since October 2011, due in large part to declining fuel prices.

A new U.S. Labor Department report also shows the Producer Price Index increased 1.1% for all of last year, compared to a 1.2% increase in 2013.

Core prices, those excluding the volatile food and energy sectors, show the PPI rose 0.3% in December from November while it is up 2.1% over the past year.

The report comes a day before the federal government releases the latest Consumer Price Index, a more closely watched gauge of inflation, with one consensus forecast calling for a 0.4% drop in December from the month before.

Thursday’s report and the one expected Friday will likely show inflation in the U.S. is well below the Federal Reserve’s target of 2% annually. This could possibly delay the central bank’s plan to increase short term interest rates about mid-year from near 0%, where they have been since late 2008, as part of an effort to stimulate the economy.

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Evan Lockridge

Evan Lockridge

Former Business Contributing Editor

Trucking journalist since 1990, in the news business since early ‘80s.

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