The United States experienced a sharper-than-anticipated increase in producer prices in November, influenced largely by a surge in food costs. Despite this, prices of services demonstrated a deceleration, offering a glimmer of hope that disinflationary patterns may still endure.
As reported by the Labor Department’s Bureau of Labor Statistics, the producer price index for final demand saw a jump of 0.4% last month, surpassing October’s upwardly revised increase of 0.3%. This was in contrast to Reuters economists’ projection of a PPI gain of only 0.2%, matching October’s initially reported rise.
Year-on-year through November, the PPI witnessed a notable uptick of 3.0%, surpassing October’s increase of 2.6%. This hike in producer prices followed a recent government report indicating a seven-month peak in consumer prices in November.
Despite persistent above-trend price pressures over the past four months, next week will likely see the Federal Reserve enacting its third consecutive interest rate cut to bolster a slowing labor market.
A substantial 0.7% surge in wholesale goods prices last month further amplified the PPI. This accounted for almost 60% of the total PPI rise, compared to October’s minor 0.1% increase. In particular, food prices experienced a significant 3.1% hike, contributing to nearly 80% of the increase in the price of goods.
Meanwhile, initial claims for state unemployment benefits for the week ended Dec. 7 increased by 17,000 to a seasonally adjusted 242,000, according to the data reported by the Labor Department on Thursday. Economists polled by Reuters had forecast 220,000 claims for the latest week.
