Wholesale Prices in US Rise 1.3% in November From Year Ago
Wholesale prices in the U.S. rose from a year earlier by the most since 2014 as food costs and retail margins increased, helping bring inflation closer to the Federal Reserve’s goal.
The producer-price index gained 1.3% in the 12 months through November, a Labor Department report showed Dec. 14 in Washington. The gauge rose 0.4% from October, the most since June and more than the median estimate of economists for a 0.1% rise.
The figures affirm a pickup in inflation as Fed officials meet in Washington, where they are widely anticipated to raise interest rates Dec. 14 for the first time in a year. Price pressures stirring in the production pipeline may potentially feed through to faster increases in the cost of living for Americans.
The year-over-year gain was the most since November 2014 and compared with the 0.9% median estimate of economists surveyed by Bloomberg.
Projections for the monthly change in producer prices ranged from a decline of 0.1% to an advance of 0.3%, according to the Bloomberg survey.
Energy costs fell 0.3% from the prior month as gasoline dropped 2.9%. Food prices showed a 0.6% increase, led by jumps in the prices of fresh fruits and melons, and beef and veal.
Excluding food and energy, wholesale prices rose 0.4% from the previous month following a 0.2% drop. Those costs increased 1.6% from November 2015.
Profit margins rose 4.2% at retailers of apparel, jewelry, footwear and accessories, the most since 2014 and accounting for a quarter of the November increase in prices for final demand services, according to the Labor Department. Margins gained 9.9% at sellers of fuels and lubricants, the fastest rate since June.
Excluding volatile components such as food, energy, and also eliminating trade services, producer costs rose 0.2% after falling 0.1% the previous month. Some economists prefer this reading because it strips out the most volatile components of PPI. Compared with a year earlier, this core measure increased 1.8%, the most since August 2014, after a 1.6% gain.
One key takeaway from the report was the increase in health care prices that are used to calculate the Commerce Department’s consumer spending inflation index, the Fed’s preferred price measure. Those costs rose 0.2% in October from the prior month, before adjusting for seasonal variations.
The producer price gauge is one of three monthly inflation reports released by the Labor Department this week. A report Dec. 13 showed import prices fell from the previous month by the most since February, led by cheaper fuel. A separate report on consumer prices will be released Dec. 15.
The Fed targets 2% annual increases in the Commerce Department’s personal consumption expenditures price index.
