US wholesale prices fell 0.3 per cent in November, the first decline since May, the Labor Department reported today.
The core producer price index for finished goods, which excludes volatile food and energy prices, fell 0.1 per cent, the first decline since June. Car prices fell 0. 8 per cent.
Inflation was also tame further back in the production pipeline. Prices of intermediate goods destined for additional processing fell 0.2 per cent, with the core intermediate rate up 0.2 per cent. Prices of crude goods rose 0.2 per cent.
Economists were looking for a gain of 0.1 per cent in the November. The core rate was expected to be unchanged.
The PPI is up 3.4 per cent in the past 12 months, while the core rate is up just 0.5 per cent. And while crude materials prices have soared 18.3 per cent year-over-year, the intermediate core rate is up just 1.8 per cent, an indication that firms have little ability to pass on the higher costs of raw materials and commodities to their customers.
Federal Reserve policymakers believe inflation will remain low for a while, according to the statement issued after Tuesday's meeting. The October 28th meeting minutes, released yesterday, indicated that policymakers foresaw few inflationary pressures building over the next year or two.
Producer prices had jumped 0.8 per cent in October on surging food prices and a jump in car prices related to the new model year.
In November, food prices dropped 0.3 per cent. Beef prices fell 4.7 per cent. Energy prices also plunged in November, falling 1.2 per cent. It's the second decline in a row and the largest since May. Gasoline prices fell 4.8 per cent while residential natural gas prices fell 1.1 per cent. Heating oil prices dropped 1.6 per cent.
AFP