US PPI Rises in November But Low Inflation Still a Concern

U.S. producer prices unexpectedly rose in November as the cost of services increased, but the underlying trend continued to point to weak inflation pressures.

The Labor Department said on Friday its producer price index advanced 0.3 percent after falling 0.4 percent in October.

In the 12 months through November, the PPI declined 1.1 percent after sliding 1.6 percent in October. November marked the 10th straight 12-month decrease in the index.

Economists had forecast the PPI unchanged last month and sliding 1.4 percent from a year ago.

Dollar strength and continued declines in oil prices amid a glut and slowing global growth have dampened price pressures, leaving inflation running persistently below the Federal Reserve’s 2 percent target.

But given a tightening labor market, economists expect the U.S. central bank to raise its short-term interest rate next Wednesday for the first time in nearly a decade.

Producer inflation is likely to remain weak after a report

on Thursday showed import prices fell in November for the ninth time this year.

via Reuters

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza