US producer prices jump on eggs, but Fed categories come in soft
The producer price index for final demand rose 0.4% from a month earlier, the most since June
US WHOLESALE inflation unexpectedly accelerated in November on a surge in egg prices, while other categories suggested a muted increase in the Federal Reserve’s preferred price gauge.
The producer price index for final demand rose 0.4 per cent from a month earlier, the most since June, according to a Bureau of Labor Statistics report released on Thursday (Dec 12). The median forecast in a Bloomberg survey of economists called for a 0.2 per cent gain. Compared with a year ago, the PPI increased 3 per cent – the largest advance since early 2023.
A measure excluding food and energy, meanwhile, rose 0.2 per cent on the month and 3.4 per cent from a year earlier.
The wholesale inflation data follow the more closely watched consumer price index, which showed on Wednesday that underlying inflation remained firm for a fourth month. The string of hotter numbers follows a rapid moderation earlier in 2024, and has added to uncertainty over the trajectory for prices and interest rates as the incoming Trump administration threatens higher tariffs on imported goods.
Economists pay close attention to the PPI report because several of its components feed into the Fed’s preferred inflation measure – the personal consumption expenditures price index. Those were favourable across the board as health care categories like hospitals, physician services, nursing home services and home health care were little changed.
Portfolio management services – a category that captures fees paid to investment advisers and generally tracks movements in the stock market – fell along with airfares.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
While the PCE data won’t be published by the time of the Fed’s policy meeting next week, central bankers will have a good idea of what it will show based on the CPI and PPI reports. They are widely expected to cut their benchmark rate by a quarter percentage point, though forecasters generally see a slower pace of reductions next year after closing out 2024 with rate cuts at three straight meetings.
Separate figures showed first-time applications for jobless benefits increased last week to a two-month high. Continuing claims, a proxy for the number of people receiving benefits, rose in the week that included the Thanksgiving holiday.
The PPI data showed goods prices jumped 0.7 per cent, the most since February. The BLS said more than 80 per cent of the advance was traced to food. Egg prices surged 55 per cent from a month earlier, largely reflecting the impact of bird flu.
Overall services costs in the PPI report edged up 0.2 per cent, the least in four months. Goods prices, excluding food and energy, rose by a similar amount. BLOOMBERG
Share with us your feedback on BT's products and services
