Wholesale prices rose at their fastest rate on record in November in the latest sign that inflationary pressures that have weakened the economy are still present, the Labor Department reported on Tuesday.
The producer price index for products, demand ended up growing 9.6% from 12 months ago after adding 0.8% in November, according to FactSet, economists were looking for an annual gain of 9, 2%.
Excluding food and energy, prices rose 0.7% on the month, bringing the core PPI at 6.9%, also the biggest gain on record. Estimates for the increase are 0.4% and 7.2% respectively, meaning that the monthly increase is faster than the estimate but the year-to-date measure is slightly slower.
The Department of Labor’s recordkeeping for title numbers begins November 2010, while core calculations are through August 2014.
These numbers come with consumer prices rising at their fastest pace in nearly 40 years and core inflation the highest in about 30 years.
Commodity demand continued to be the bigger driver of producer prices, up 1.2% on the month, slightly slower than October’s 1.3% gain. Demand-driven services inflation eventually picked up. at 0.7% monthly, much faster than October’s 0.2% and a sign that the services segment can catch up after lagging through multiple rallies.
Stock market futures add to the hole post-release, as investors see inflation and the potential for a strong Federal Reserve policy response as threats to a boom year for stocks.
The Fed started its two-day meeting on Tuesday, with high expectations that it would remove economic help faster and start raising interest rates around mid-2022.
Fed officials have for months emphasized that inflation is “transient” and tied to pandemic-related factors that will eventually subside. However, in recent days, Chairman Jerome Powell and others have pointed out that the word is no longer relevant and will likely be dropped from central bank communication in the future.
Supply chain congestion and surging demand are the main drivers of inflation, but only marginally.
On-Demand Energy prices last added 2.6% in November despite a drop in crude oil prices, while food prices rose 1.2%. Transportation and warehousing grew 1.9%, while portfolio management grew 2.9%.
Elsewhere, scrap metal prices increased 10.7%, a series of other costs including gasoline, vegetables, fruits and industrial chemicals also increased. Diesel fuel costs fell 2.6% on the month, while wholesale chemicals and allied products fell 1.3%.
