U.S. producer prices rise slightly above expectations in November, likely to continue improving gradually

U.S. producer prices rose slightly above consensus expectations in November on a sequential basis. Producer prices were up 0.4 percent, as compared with consensus forecast of 0.3 percent rise. Stripping food, trade and energy, PPI also rose 0.4 percent, as at the headline level the strength in the energy component countered the softness in trade margins.

Prices of goods and services rose sequentially in November. In goods, prices of food rose 0.3 percent, while energy prices rose 4.6 percent. Core goods prices were up 0.3 percent. Services PPI rose modestly by 0.2 percent sequentially after a drag from trade services that dropped 0.3 percent.

On a year-on-year basis, producer prices were up 3.1 percent, reaching their highest since January 2012 in an evident sign of the momentum gathering behind pipeline price pressures, noted Barclays in a research report. Producer Price Index excluding trade, energy and food was up 2.4 percent.

Personal consumption PPI rose 0.6 percent sequentially and 3 percent year-on-year. Stripping energy, food and trade, PPI personal consumption was up 0.5 percent, its most solid reading since April 2017 when it rose 0.7 percent sequentially.

Today’s report showed the continued improvement in producer price pressures in November, while it also revealed that the measure excluding components such as energy, trade and food measures also rose at a strong rate.

“We expect pipeline price pressures to continue improving gradually, reflecting that the headwind from imported inflation and global commodity prices has abated since last year”, stated Barclays.

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