U.S. Producer Prices Rose Robustly in November -- Update
December 12 2017 - 11:06AM
Dow Jones News
By Sarah Chaney
WASHINGTON -- A gauge of U.S. business prices rose across a
broad range of goods and services in November, a signal of building
price pressures at a time when inflation has remained puzzlingly
low.
The producer-price index for final demand, which measures
changes in the prices that U.S. companies receive, advanced 3.1% in
November from a year earlier, the biggest jump in nearly six years,
the Labor Department said Tuesday.
Producer prices rose 0.4% in November for the third consecutive
month. Energy prices, which grew 4.6% last month, boosted the
overall month-over-month rise in producer prices. Even when
excluding food and energy and a volatile category known as trade
services, prices businesses charged were up 0.4% in November from a
month earlier.
"The most striking thing to me about the November PPI is the
increases were very widespread," said Stephen Stanley, chief
economist at Amherst Pierpont Securities. "The PPI numbers
definitely suggest we may be turning a corner."
November saw price gains in areas including food, light motor
trucks and airfares. That might portend some pickup in certain
consumer price categories in the coming months.
Producer price inflation has continued to strengthen since
hitting a recent low of a 1.9% year-over-year increase in June.
Rising oil prices and improved global demand have helped push up
the index this year.
Producer prices don't necessarily directly translate into what
consumers pay, but in general, PPI readings follow the same trends
as other major inflation gauges, which have remained subdued this
year.
The Federal Reserve's preferred inflation gauge rose 1.6% in
October from a year earlier, according to the Commerce Department.
That annual inflation reading has remained below the Fed's 2%
target for the best part of 5 1/2 years.
Fed officials are likely to raise their benchmark short-term
rate Wednesday by a quarter-percentage point to a range between
1.25% and 1.5%, but low inflation readings could complicate
officials' decisions on how quickly to raise interest rates in 2018
and beyond.
The Labor Department's report on the consumer-price index
arrives Wednesday, with economists expecting a 0.4% monthly
increase for the inflation measure.
Write to Sarah Chaney at sarah.chaney@wsj.com
(END) Dow Jones Newswires
December 12, 2017 11:51 ET (16:51 GMT)
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