Producer Price Index Slows Down in December 2024

The Producer Price Index (PPI) for manufacturing grew at a slower pace in December 2024, with an annual increase of 0.2 percent, down from 0.4 percent in November. In December 2023, the PPI saw a 0.6 percent rise.

Food Manufacturing Slows Growth

The main reason for the slowdown was the weaker growth in food manufacturing. The PPI for food products increased by 1.7 percent in December, lower than the 2.4 percent recorded in November. Food manufacturing contributed 29.8 percent to the overall slowdown in manufacturing prices. Among 22 industry divisions, food manufacturing carries the most weight in PPI calculations.

Other industries that contributed to the slowdown include basic metals, which grew by 1.5 percent compared to 3.2 percent in November, and transport equipment, which rose by 1.1 percent from 2.1 percent in the previous month.

Out of the 22 industry divisions, 12 posted annual increases, while 7 saw declines.

Key Contributors to PPI Growth

The three biggest contributors to PPI growth in December 2024 were:

• Computer, electronic, and optical products
• Food products
• Beverages

Slowdown in Food Processing

Within food manufacturing, the processing and preserving of fruits and vegetables was the main factor behind the slowdown. Its growth rate dropped to 3.1 percent in December from 7.4 percent in November.

• Other factors that contributed to slower food manufacturing growth include:
• Other food products: 1.4 percent in December, down from 2.0 percent in November
• Meat processing: 0.4 percent in December, slightly lower than 0.5 percent in November
• Dairy products: A decline of 0.4 percent in December from a 0.5 percent increase in November
• Grain mill products, starches, and starch products: A sharper decline of 5.1 percent in December from 4.6 percent in November

Monthly Decline in PPI

On a month-to-month basis, the PPI for manufacturing declined by 0.2 percent in December, reversing the 0.6 percent increase seen in November.

The transport equipment sector played the biggest role in this decline, dropping by 1.4 percent in December after a 1.0 percent increase in November. Other major contributors to the decline were:

• Computer, electronic, and optical products: 0.1 percent in December, down from 0.9 percent in November
• Basic metals: 1.0 percent decline in December after a 0.6 percent rise in November

Among the 22 industry divisions, 5 saw increases, 12 recorded declines, and 2 remained unchanged.

Food Processing Sees Slower Monthly Growth

The PPI for food products increased by 0.2 percent in December, lower than the 0.6 percent rise in November. The main factor was a slowdown in processing and preserving fish, crustaceans, and mollusks. This category dropped by 0.7 percent in December after a 2.6 percent rise in November, contributing 53.1 percent to the overall slowdown in food manufacturing.

Annual PPI Growth Rate Declines

For the full year of 2024, the annual average growth rate of PPI fell by 0.7 percent. This follows a 6.5 percent rise in 2022 and a 1.4 percent increase in 2023.

• The slower annual PPI growth was mainly due to weaker food manufacturing, which grew by 1.1 percent in 2024 compared to 3.0 percent in 2023. Other factors included:
  Beverages: 3.7 percent growth in 2024, down from 9.4 percent in 2023
• Fabricated metal products (except machinery and equipment): 3.9 percent decline in 2024, compared to a 3.5 percent increase in 2023

Food manufacturing’s slowdown in 2024 was largely driven by a sharp drop in processing and preserving fish, crustaceans, and mollusks, which fell by 10.2 percent after an 8.7 percent increase in 2023. (ASC)