Another key inflation measure shows that price pressures subsided but remained stubbornly high in November, despite the Federal Reserve’s months-long effort to fight inflation by raising interest rates.
The producer price index, which measures the prices paid for goods and services by firms before they reach consumers, rose 7.4% in November compared to a year earlier, the Bureau of Labor Statistics reported Friday. This is down from the 8.1% adjusted gain reported for the month of October.
US stocks fell immediately after the report was released, as economists polled by Refinitiv expected wholesale prices to rise just 7.2% annually. The higher-than-expected inflation reading raised concerns about whether the Fed will be able to slow the pace of interest rate hikes.
But federal funds rate futures still show a strong potential for a half-point increase at the central bank’s policy-making meeting next week, rather than the three-quarter point increase that was set at the past four meetings.
The Producer Price Index report generally receives less attention than the corresponding Consumer Price Index, which measures the prices that US consumers pay for goods and services. But this is a rare month as the PPI report was released before the CPI report which is due out on Tuesday.
This, in addition to the Federal Reserve meeting scheduled for Tuesday and Wednesday next week, makes this inflation report of particular interest to investors.
Chris Zaccarelli, chief investment officer at The Independent, said: “The CPI release next Tuesday will be more important than today’s data, but with traders nervous, any indication that prices remain elevated and inflation is more steady than currently believed is negative for markets. “. Counselor Alliance.
Overall prices rose by a seasonally adjusted 0.3% from October – the same monthly increase reported in September and October – but slightly higher than the 0.2% rise economists had expected.
After excluding volatile food and energy prices, the core PPI rose 6.2% for the year ending in November, down from a revised increase of 6.8% in the previous month. Economists expected an increase of only 5.9%.
The core producer price index posted a 0.4% increase from October, a much larger rise than the revised 0.1% month-on-month rise in that previous month, and twice as large as economists’ forecasts for a 0.2% rise.
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