Service costs significantly increased, with US December PPI growth exceeding expectations.

The annual rate of US PPI in December was 3%, higher than the expected 2.7% and unchanged from the previous value of 3.00%. The annual rate of US core PPI in December was 3.3%, higher than the expected 2.90% and unchanged from the previous value of 3.00%. After the data was released, the US dollar index DXY rose slightly by nearly 10 points in the short term, and US bond yields also edged higher. Among them, service costs increased significantly, with the trade profit rate index marking the largest increase since mid-2024. The price increase in this category was mainly attributed to the rise in profit margins for wholesale machinery equipment. However, commodity prices remained unchanged after rising last month. The PPI data is consistent with the data released earlier this month. The year-on-year increase in US December CPI announced in mid-January was 2.7%, matching market expectations and the previous value; the month-on-month increase was 0.3%, also in line with market expectations and the previous value. The latest PPI indicates that some companies are passing on the higher import tariffs on raw materials in their production processes to consumers. Although the inflation level has increased relative to the Federal Reserve's target, Democrats still "expect" no signs of tariff-induced inflation in their survey responses. Analysts point out that Powell previously mentioned that the year-on-year increase in core PCE in December is expected to be around 3.0%. As the market is still waiting for next week's data release, with the non-farm payroll report being the main focus, this PPI report is unlikely to trigger significant market fluctuations.