Summary
Data from the Producer Price Index (PPI) indicates that wholesale inflation remained unchanged in November, which is better than the expectations of a 0.1% increase. Excluding volatile food and energy costs, the core PPI rose by 0.1% during the month, contributing to a 2.5% year-over-year increase. Fuel prices continued to drop by 4.1%, while egg costs surged by 59% in November.
Wholesale Inflation Stabilizes in November
Wholesale inflation did not change in November, not following the decline of the previous month, but the measure of prices paid by merchants and service providers remains lower than economists had expected.
Analysis of the Producer Price Index
Although the Producer Price Index did not change in November, it was a better reading than the 0.1% increase in wholesale prices that economists had expected. This comes after the Consumer Price Index (CPI), which measures retail prices, showed another decline in inflation to 3.1% over the 12 months up to November.
Federal Reserve Monitoring Inflation Data
The Federal Reserve is closely monitoring inflation data to see whether price increases are slowing to approach the targeted rate of 2%. After reaching 9.1% in June 2022, the highest level of price increases since the early 1980s, inflation has steadily decreased as the central bank has repeatedly raised interest rates.
Decline in Fuel Prices
Fuel prices fell by 4.1% during the month, after a drop of 15.3% in the previous month, and overall energy prices decreased by 1.2% in November, marking a decline for the second consecutive month. Fuel prices dropped below $3 in many areas of the country. Natural gas and electricity prices increased over the last month.
Rising Wholesale Food Costs
Some wholesale food costs increased in November, including a 59% rise in egg prices, while prices for fresh fruit and watermelon also rose. Accommodation services for travelers saw a 4% increase, including hotels, food, laundry services, and entertainment.
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Article sources:
– U.S. Bureau of Labor Statistics. “Producer Price Indexes – November 2023.”
– Bureau of Labor Statistics. “Industries at a glance: Accommodation: NAICS 721.”
Source: https://www.investopedia.com/wholesale-inflation-holds-steady-below-projections-8415337
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