US November Wholesale Prices Rise 0.4% Month-on-Month, Exceeding Expectations

PPI Rises 3% Year-on-Year, Highest in 21 Months

Last month, the Producer Price Index (PPI), a wholesale price indicator in the United States, showed a larger-than-expected increase, surpassing market forecasts.

Reuters Yonhap News

According to the U.S. Department of Labor on the 12th (local time), the November PPI rose 0.4% compared to the previous month. This exceeded not only October's increase of 0.3% but also experts' expectations of 0.2%.

The annualized PPI for the past 12 months rose 3% in November, a significant increase from 2.6% in October. This is the largest increase since February last year and far exceeded the market forecast of 2.6%.

The core PPI, which excludes the volatile food and energy prices, saw its monthly increase slow from 0.3% in October to 0.2% in November, matching market expectations (0.2%). The year-on-year increase remained steady at 3.4%, surpassing the expert forecast of 3.2%. The core PPI is considered an indicator that reflects the underlying trend of inflation.

Specifically, commodity prices rose 0.7% compared to the previous month, marking the largest increase since February. The U.S. Department of Labor stated that over 80% of the total PPI increase came from food prices. Egg prices surged 55% month-over-month.

The wholesale price index, PPI, influences the Consumer Price Index (CPI) with a time lag and can be seen as a leading indicator of retail prices. With the November PPI increase expanding compared to one month and one year ago, there is analysis suggesting that inflationary pressures are not easing easily. Wall Street is increasingly expecting that the Federal Reserve (Fed) will slow the pace of monetary easing by cutting the benchmark interest rate by 0.25 percentage points at the Federal Open Market Committee (FOMC) meeting scheduled for the 17th-18th, then holding rates steady in January next year.

In particular, uncertainty regarding inflation indicators including the PPI and the future interest rate path is expected to grow further as Donald Trump, the U.S. President-elect who will take office in January next year, has announced plans for high tariffs. Trump previously pledged a universal tariff of 10-20% on all imports worldwide and a 60% tariff on imports from China. At the end of last month, he also announced plans to impose a 25% tariff on imports from Mexico and Canada.

The November CPI, released a day before the PPI announcement, rose 0.3% month-over-month and 2.7% year-over-year. Although these increases were larger than October’s rates (0.2% and 2.6%, respectively), both matched market expectations. While prices did not spike sharply, the trend of disinflation (slowing inflation rate) is considered to have halted. The core CPI rose 0.3% month-over-month and 3.3% year-over-year, matching both October’s figures and market forecasts.