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Daily Updates | Wholesale Inflation Holds Steady, Price Pressure Continues to Ease

Wholesale Inflation Holds Steady, Price Pressure Continues to Ease

Wholesale Inflation Holds Steady, Coming in Lower Than Expectations

Wholesale inflation in the United States was unchanged in November, indicating that price increases in the economy and inflation are gradually easing. 

The Producer Price Index(PPI), which measures a broad change of prices on final demand products, showed no change in November, following a 0.4% decrease in October but still less than the Dow Jones estimate for a 0.1% gain. It comes after the Consumer Price Index(CPI), which showed another drop in inflation to 3.1% for the 12 months ending November. 

Core PPI, which excludes food and energy costs, were also unchanged in October and were up 2% from a year ago- showing a mild year-over-year growth since January 2021. Among goods and services, prices were also the same from October to November, with a 4.1% drop in gasoline prices. Services prices were also unchanged. 

The release comes a day after the Labour Department said its consumer price index rose by 0.1% in November and 31.1% from a year ago. The PPI gauges the prices producers receive while the CPI measures what consumers pay and is considered a leading signal for prices in the pipeline. 

The easing inflation data along with other economic signals provided the Federal Reserve with enough room to hold benchmark interest rates steady in their meeting this Wednesday. 

Fed Monitoring Inflation Data and Prices

The Federal Reserve is closely monitoring the inflation data to see if price increases continue to slow to achieve their target rate of 2%. After reaching a whopping 9.1% in June 2022, the highest measurement of price increase since the 1980s, inflation has gradually declined as the central bank has repeatedly raised interest rates.

Gas prices fell 4.1% over the month, following last month’s 15.3% drop. Meanwhile, overall energy prices fell 1.2% in November, declining for the second month consecutively. Gas prices have fallen below $3 in many parts of the country. Whereas prices for utility natural gas and electric power moved higher last month. 

In the food department, wholesale costs for some food increased in November. The price of eggs jumped 59%, while the prices of fresh fruits also rose. There was also a 4% increase in traveler accommodation services, including hotels, food, laundry, and recreation. 

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