By Nathalie Voit
Wholesale prices surged to their highest levels since November 2010, advancing 9.6% for the 12 months ending in November, according to data from the Labor Department released Dec. 14.
The Producer Price Index (PPI) for final demand goods rose 0.8% in November after moving up 0.6% in August, September, and October.
The index for final demand products surged 9.6% over the previous 12 months. This was the largest annual gain since 12-month data was first collected in November 2010, the Labor Department said. The index exceeded economist expectations, which predicted an annual gain of 9.2%, according to FactSet.
The core producer price index, which excludes the volatile categories of food, energy, and trade services, rose 0.7% in November, its largest gain since climbing 0.8% in July. The release said that the core PPI jumped 6.9% in November from one year ago, its largest year-on-year advance since the department first kept records in August 2014.
Core PPI prices were predicted to increase 0.4% for the month, and 7.2% year-over-year, meaning inflation ran hotter than analysts expected month-over-month but slower on an annual basis, according to CNBC.
Prices for final demand services moved up 0.7% in November. The increase was driven by inflation for final demand services excluding trade, transportation, and warehousing. Prices for portfolio management paved the way, posting 2.9% price growth. The final demand index for trade services and final demand transportation and warehousing services also reported 0.6% and 1.9% inflation, respectively.
The index for final demand products ran even higher at 1.2%, with high demand driving the surge in wholesale prices. Final demand goods saw across-the-board price increases, with the energy index taking the top spot at 2.6%, followed by the foods index at 1.2% and the final demand goods less food and energy index at 0.8%.
Within the final demand goods index, iron and steel scrap prices spiked 10.7%. A range of other goods, including gasoline, fresh fruits and melons, fresh and dry vegetables, industrial chemicals, and jet fuel, also moved higher. In contrast, prices for diesel fuel slipped 2.6%, while margins for chemicals and allied products wholesaling declined 1.3%.
The dismal data is the latest sign inflationary pressures are here to stay. Given the November reading, the Fed is expected to take a more active approach in curbing inflation.
The central bank will begin its two-day meeting on Dec. 14, chaired by Jerome Powell. U.S. Federal Reserve officials will release their quarterly projections for the economy, inflation, and policy rates in a much-anticipated update on Wednesday.