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U.S. wholesale inflation showed modest growth in November, according to a government report that faced delays due to the recent federal government shutdown. The Labor Department announced Wednesday that the producer price index (PPI), which measures inflation at the wholesale level before it reaches consumers, increased by 0.2% from October and stood 3% higher compared to the same month a year earlier.
The data release comes weeks behind schedule, as the 43-day government shutdown disrupted the normal economic reporting calendar. Originally slated for December 11, the November figures are only now becoming available to markets and policymakers. Additionally, the Labor Department has rescheduled the December PPI data release for January 30, pushing back what would have typically been published today.
A closer examination of the November figures reveals that gasoline prices were a significant contributor to the monthly increase. When excluding the more volatile food and energy categories, the core wholesale prices remained unchanged from October while maintaining a 3% year-over-year increase compared to November 2024.
The steady but modest rise in wholesale prices comes despite earlier predictions that President Donald Trump’s extensive import tariffs would trigger a more substantial surge in inflation throughout the economy. So far, these tariffs have had a less dramatic impact on prices than many economists initially forecasted, though they continue to influence certain sectors and supply chains.
This wholesale inflation report arrives just one day after the Labor Department released consumer inflation data showing that prices at the retail level rose 0.3% in December compared to November, with a year-over-year increase of 2.7%. While consumer inflation has cooled somewhat, it remains above the Federal Reserve’s stated target of 2%, continuing to present challenges for monetary policymakers.
The relationship between wholesale and consumer inflation is closely monitored by economists and investors, as changes in producer prices often precede shifts in consumer prices. The moderate wholesale inflation suggests that businesses are absorbing some cost increases rather than passing them entirely to consumers, potentially due to competitive pressures or concerns about demand elasticity.
Financial markets have been particularly attentive to inflation data in recent months as they attempt to anticipate the Federal Reserve’s next moves on interest rates. The central bank has maintained a cautious stance as it balances inflation concerns against economic growth objectives.
For industries particularly sensitive to wholesale price movements, such as manufacturing, construction, and retail, the modest inflation reading provides some relief amid other economic uncertainties. However, the sustained 3% year-over-year increase in the core PPI indicates underlying inflationary pressures that could eventually work their way through the supply chain.
Economists note that several factors beyond tariffs continue to influence wholesale prices, including global commodity prices, labor costs, and ongoing supply chain adjustments following the pandemic disruptions. These dynamics vary significantly across different sectors of the economy.
The delayed economic data releases resulting from the government shutdown have complicated the work of policymakers, businesses, and investors who rely on timely information for decision-making. As the reporting schedule returns to normal in the coming weeks, markets will be watching closely for any signs of acceleration or deceleration in both wholesale and consumer inflation that might signal broader economic trends for 2025.
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9 Comments
The steady but modest rise in wholesale prices is somewhat reassuring, though I imagine the Fed will still be watching this data closely as they consider their next policy moves. Curious to see if consumer prices start to follow a similar pattern.
Interesting to see producer prices rise modestly in November. The delayed reporting due to the government shutdown must have been frustrating for policymakers and markets. Curious to see how this data impacts the Fed’s next moves.
The steady but modest rise in wholesale prices is an interesting data point. I wonder how this will factor into the Fed’s decision-making on interest rates going forward, especially given the disruptions from the government shutdown.
That’s a good question. The Fed will likely be weighing a range of economic indicators as they assess the appropriate monetary policy stance. This producer price data is just one piece of the puzzle.
Appreciate the report providing clarity on the November producer prices, despite the disruptions from the government shutdown. The unchanged core wholesale inflation is an encouraging sign, though I wonder if we’ll see more volatility ahead.
The 0.2% increase in producer prices is a fairly mild uptick, though the year-over-year 3% rise is more notable. I wonder how this will affect consumer inflation and the outlook for interest rates going forward.
You’re right, the core inflation rate staying flat month-over-month is a sign that underlying inflationary pressures may be stabilizing. Will be interesting to see how this plays out.
Interesting to see the delayed release of this data due to the federal shutdown. The mild 0.2% increase in producer prices seems relatively benign, though I’ll be curious to see how it impacts the broader economic outlook in the coming months.
It’s good to see the government data getting back on track after the shutdown delays. The details on gasoline prices driving the monthly increase are insightful. Curious to see if this signals broader inflationary trends in the pipeline.