Wholesale costs in the United States picked up sharply last month, signaling that price pressures are still evident in the economy even though inflation has tumbled from the peak levels it hit more than two years ago.
The Labor Department reported Thursday that its producer price index — which tracks inflation before it reaches consumers — rose 0.4% last month from October, up from 0.3% the month before. Measured from 12 months earlier, wholesale prices climbed 3% in November, the sharpest year-over-year rise since February 2023.
Higher food prices helped fuel the November wholesale inflation reading, which was higher than economists had expected.
Excluding volatile food and energy prices, so-called core producer prices rose 0.2% from October and 3.4% from November 2023.
The wholesale price report comes a day after the government reported that consumer prices rose 2.7% in November from a year earlier, up from an annual gain of 2.6% in October. The increase, fueled by pricier used cars, hotel rooms and groceries, showed that elevated inflation has yet to be fully tamed.
Inflation in consumer prices has plummeted from a four-decade high 9.1% in June 2022. Yet despite having reached relatively low levels, it has so far remained persistently above the Fed’s 2% target.
Despite the modest upticks in inflation last month, the Federal Reserve is poised to cut its benchmark interest rate next week for a third consecutive time. In 2022 and 2023, the Fed raised its key short-term rate 11 times — to a two-decade high — in a drive to reverse an inflationary surge that followed the economy's unexpectedly strong recovery from the COVID-19 recession. The steady cooling of inflation led the central bank, starting in September, to begin reversing that move.
The producer price index released Thursday can offer an early look at where consumer inflation might be headed. Economists also watch it because some of its components, notably healthcare and financial services, flow into the Fed’s preferred inflation gauge — the personal consumption expenditures, or PCE, index.
