U.S. Wholesale Prices Rise 0.2% in November, Below Expectations

Inflation Concerns Ease Despite Rising Energy Prices
Core PPI Remains Unchanged

The U.S. wholesale price growth rate for November of last year fell short of market expectations.

Beef is displayed at a Costco store in Novato, California, USA. Photo by AFP News Agency

According to the U.S. Department of Labor on January 14 (local time), the Producer Price Index (PPI) for November of last year rose by 0.2% compared to the previous month. Although this was higher than October's figure (0.1%), it did not meet the expert forecast of 0.3% compiled by Dow Jones.

The core PPI, which excludes highly volatile items such as food and energy, remained unchanged from the previous month. This result was not only lower than October's 0.3% but also fell well below the market expectation of 0.2%.

However, on an annual basis, the PPI increased by 3% compared to the same period a year earlier, significantly exceeding the Federal Reserve's target of 2%. The core PPI rose by 3.5% during the same period, marking the largest increase in eight months since March of last year.

Breaking it down further, goods prices rose by 0.9% from the previous month, driving the overall increase in the PPI. In particular, energy prices surged by 4.6%, accounting for more than 80% of the total increase. In contrast, service prices showed no change.

With the newly released PPI coming in below market expectations, there is an assessment that inflationary pressures are easing more than anticipated. As the PPI, also known as wholesale prices, is reflected in consumer prices with a certain time lag, it is considered a leading indicator for the Consumer Price Index (CPI).

Previously released retail price indicators also somewhat alleviated concerns about rising inflationary pressure. The previous day, the U.S. Department of Labor announced that the core CPI for December rose 2.6% year-on-year, which is slightly below the market forecast of 2.7%. The overall CPI growth rate was 2.7% compared to the previous year, matching both expert forecasts and the previous month's increase.

On Wall Street, employment and price indicators are being closely watched to gauge the Federal Reserve's future interest rate trajectory. As retail and wholesale price pressures ease, there are projections that this could support consumption, which accounts for two-thirds of the U.S. economy.

According to the U.S. Census Bureau under the Department of Commerce, retail sales in November of last year amounted to $735.9 billion, an increase of 0.6% from the previous month. This figure exceeded the expert forecast of 0.5% compiled by Bloomberg and marked the largest increase since July.

Bloomberg analyzed, "Regarding inflation (easing) indicators, some economists believe that the extent to which tariffs are being passed on to consumer prices has peaked," adding, "This could support future consumption of goods."