A key inflation gauge, price pressures cooled in November but remained elevated


New York
CNN

Another key inflation gauge showed price pressures cooled but rose stubbornly in November, despite months of efforts by the Federal Reserve to fight inflation with higher interest rates.

The producer price index measures the prices paid by businesses for goods and services before they reach consumers. The Bureau of Labor Statistics reported Friday that it was 7.4% in November from a year earlier. This was down from a revised 8.1% gain reported in October.

U.S. stocks fell immediately after the report, as economists surveyed by Refinitiv had expected wholesale prices to rise only 7.2% annually. The higher-than-expected inflation readings raised concerns about whether the central bank could slow the pace of rate hikes.

But futures for the central bank’s funds rate show a strong possibility of a half-point increase at the central bank’s policymaking next week, rather than the three-quarter-point hike established in the past four meetings.

The PPI report usually gets less attention than the relative Consumer Price Index, which measures the prices US consumers pay for goods and services. But this is a rare month when the PBI report came out ahead of the CBI report due on Tuesday.

That and the central bank’s meeting scheduled for Tuesday and Wednesday next week make this inflation report important for investors.

“Next Tuesday’s CPI release will be more important than today’s data, but with traders on edge, any sign of higher prices and inflation being stickier than currently believed is negative for markets,” said Chris Zaccarelli, chief investment officer for Freedom. Advisory Alliance.

Overall prices rose a seasonally adjusted 0.3% compared to October – the same monthly increase reported in both September and October – but slightly more than economists’ forecast of a 0.2% rise.

Stripping out volatile food and energy prices, core PPI rose 6.2% for the year ended November, down from a revised 6.8% increase in the previous month. Economists had predicted an increase of only 5.9%.

Core PPI posted a 0.4% increase from October, a much larger rise than the revised 0.1% month-on-month rise in the previous month, and more than twice as large as the 0.2% rise forecast by economists.

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