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# Inflation Is Falling
- URL: https://www.yardeniquicktakes.com/inflation-is-falling/
- Published: 2023-01-19T02:19:29.000Z
- Updated: 2023-01-19T02:19:29.000Z
- Author: Ed Yardeni
- Tags: Inflation, Interest Rates

Interest rates fell sharply today on news that December's PPI confirmed that inflation is falling rapidly. The PPI inflation rate plunged from almost 18.0% y/y in mid-2022 to 6.2% by the end of the year (chart). Both the goods and services components of the PPI are disinflating.

![](https://storage.ghost.io/c/16/ef/16efc0dd-240f-4f5e-9e01-d619d6fd4fd1/content/images/2023/01/capture1-15.jpg)

The PPI includes indexes for personal consumption based on prices received by the providers of the goods and services purchased by consumers (chart). Here are the key stats:

(1) *Total*. The final demand PPI for personal consumption dropped from about 10.0% y/y during the first half of 2022 to 5.6% during December. The three-month annualized rate was down to just 0.9% during December suggesting that the y/y rate will continue to fall in the next few months.

(2) *Goods*. The goods component has been cut in half from about 20.0% to under 10.0% during the second half 2022\. It still remains surprisingly high considering that it is down to 4.7% in the CPI. However, the three-month annualized rate for consumer goods in the PPI was down to -2.8% at the end of last year.

(3) *Services*. The PPI measure of consumer services does not include rent. The y/y inflation rate was down to 4.5% during December, well below the 7.5% rate for CPI services. The three-month annualized inflation rate for consumer services in the PPI was down to only 2.2%.

![](https://storage.ghost.io/c/16/ef/16efc0dd-240f-4f5e-9e01-d619d6fd4fd1/content/images/2023/01/capture2-16.jpg)

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