Wholesale prices rose more than expected in November, dampening hopes that inflation could be headed lower, the Labor Department reported Friday.
The producer price index, a measure of what companies get for their products in the pipeline, increased 0.3% for the month and 7.4% from a year ago. Economists surveyed by Dow Jones had been looking for a 0.2% gain.
Excluding food and energy, core PPI was up 0.4%, also against a 0.2% estimate.
Stocks fell sharply following the report, with futures tied to the Dow Jones Industrial Average off more than 150 points after previously indicating a positive open on Wall Street. Treasury yields moved higher.
The hot inflation data keeps the Federal Reserve on track for another interest rate increase next week, likely a 0.5% hike that would push benchmark borrowing rates to a target range of 4.25%-4.5%. Policymakers have been pushing rates higher in an effort to quell stubborn inflation that has emerged over the past 18 months after being mostly dormant for more than a decade.
The release comes amid other signs that price increases at least were decelerating from a pace that had put inflation at its highest level in more than 40 years. However, the data Friday, which tends to be a leading indicator of underlying price pressures, shows that shaking off inflation could be a long slog.
This was the third month in a row that headline PPI increased 0.3%. On an annual basis, the increase represents a decline from the 11.7% peak hit in March, but is still well ahead of the pre-pandemic pace at least going back to 2010.
The increase came despite a 3.3% decline in final demand energy costs. That was offset by an identical 3.3% increase in the food index. The trade index rose 0.7%, while transportation and warehousing fell 0.9%.
Excluding food, energy and trade services, PPI increased 0.3% from a month ago and was up 4.9% on an annual basis, the lowest since April 2021.
Services inflation accelerated for the month, rising 0.4% after being up just 0.1% the previous month. One-third of that gain came from the financial services industry, where prices surged 11.3%. That was offset somewhat by a sharp decline in passenger transportation costs, which fell 5.6%.
On the goods side, the index rose just 0.1%, steep decline from its 0.6% October gain. That modest gain came despite a 38.1% acceleration in prices for fresh and dry vegetables. Prices moved higher across multiple food categories even as the gasoline index tumbled 6%.
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