Wholesale prices rose more than expected in November, further strengthening signs of continued inflation.
The Producer Price Index (PPI), which tracks price changes seen by businesses, rose 3% year over year, up from 2.4% in October and 2.6% as expected by economists, according to a Thursday report from the Bureau of Labor Statistics. exceeded the rise. . This marked the highest year-over-year increase since February 2023. On a monthly basis, prices rose 0.4% compared to a 0.2% rise in October.
“Core” prices, which exclude food and energy, rose 3.4% from a year earlier, exceeding the 3.1% rise in October. Economists had expected a 3.2% increase. Meanwhile, core prices rose 0.2% from the previous month, matching last month’s increase and economist forecasts.
“Once you get past the headlines, the PPI isn’t that scary,” Nationwide Financial Markets Economist Oren Krachkin said of the November Producer Price Index report released this morning. “The underlying data is new. “While this allays concerns about a sharp rise in inflation, it does not suggest that inflation is likely.” It quickly drops to 2%. Producer prices and the broader inflation complex have a long and difficult path toward the Fed’s goals. ”
Thursday’s PPI readings came a day after the release of the November Consumer Price Index, which showed core inflation rose 3.3% for the fourth consecutive month. However, the consumer price index was mostly in line with expectations, and the impact was not strong enough to shake investors’ confidence that the Federal Reserve will cut interest rates at next week’s meeting.
Paul Ashworth, chief North American economist at Capital Economics, said Wednesday that the stickiness of the CPI statistics was “a little disconcerting.” “But we don’t think that will persuade the Fed to forego another 25bp rate cut at next week’s FOMC meeting.”
Still, data from recent months taken together show that inflation is not falling rapidly toward the Fed’s 2% target. As a result, investors expect the Fed to cut interest rates less in 2025 than originally expected.
“The Fed can generally be satisfied with the progress it has made in controlling high levels of inflation over the past few years,” Rick Rieder, global CIO of fixed income at BlackRock, wrote in a note Wednesday. “However, much of this progress is now behind us, and inflation could remain stubbornly stuck around current levels for some time.”
Read more: How Fed Rate Cuts Affect Bank Accounts, CDs, Loans, and Credit Cards
Josh Schafer is a reporter for Yahoo Finance. X Follow him at @_joshschafer.
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