As indicated in a report by the Bureau of Labor Statistics on Thursday, a key indicator of wholesale prices surged beyond expectations in November which raised concerns about the pace of progress in curbing inflation.
The Producer Price Index (PPI) which reflects the prices producers receive for their goods at the final-demand stage rose by 0.4% for the month; it surpassed the estimate by Dow Jones consensus of 0.25. Over the years, the PPI has seen a 3% increase which marks the largest rise since February 2023.
The increase in core PPI was by 0.3% excluding energy and food which aligns with the predictions made, however, when trade services are excluded, the increase in PPI was a modest 0.1%. The year-over-year rise of 3.5% was also the highest since February 2023.
The Labor Department on Thursday, in other economic updates revealed that the initial claims for unemployment insurance has reached a seasonally adjusted 242,000 for the week ending 7th of December. This is significantly above the expected 220,000 and up from the 17,000 from last week.
A mixed picture was seen in the inflation landscape, prices for final-demand goods jumped by 0.7% in November which is the most significant increase since February. Strikingly, 80% of this rise was driven by a 3.1% spike in food prices, as noted by BLS.
As detailed in a separate BLS report on consumer prices released on Wednesday, within the food sector, chicken egg prices skyrocketed by 54.6% which reflects a broader trend of increasing costs for items such as fresh fruits, poultry and dry vegetables. Prices of eggs jumped 8.3% for the month and were up 37.5% when compared to previous years.
Service costs also saw a 0.2% increase which is mostly because of the 0.8% rise in the trade.
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