Originally Published: 12 JAN 24 08:34 ET

Updated: 12 JAN 24 08:44 ET

By Alicia Wallace, CNN

New York (CNN) — US producer prices fell in December for the third consecutive month, bringing a closely watched gauge of inflation to a rate more in line with pre-pandemic times.

Wholesale inflation as measured by the Producer Price Index rose 1% annually in December, up slightly from November’s revised 0.8% reading, according to data released Friday by the Bureau of Labor Statistics.

On a monthly basis, prices fell 0.1%, notching a third straight month of declines with November’s previously flat reading being revised down to a 0.1% drop. Those followed October’s sharp 0.4% decline (influenced by a steep contraction in energy and gas prices).

Economists projected that PPI, which measures the average price changes that businesses pay to suppliers, would pick up by 0.2% for the month and rise 1.4% for the 12 months ended in December, according to FactSet estimates.

When stripping out the food and energy categories, which tend to be volatile, core PPI was flat for the month, bringing the yearly increase down from 2% to 1.8%.

PPI is a closely watched inflation gauge since it captures average price shifts before they reach consumers and serves as a potential signal for the prices consumers ultimately end up paying.

Friday’s report is one of the last major pieces of inflation data (with the critical Personal Consumption Expenditures data scheduled for January 26) to land before the Federal Reserve’s policymaking meeting at the end of the month. The US central bank has become increasingly data dependent in its campaign to bring down inflation.

This story is developing and will be updated.

The-CNN-Wire