US producer prices rise strongly, point to firming inflation

US producer prices rose in the month of November as gasoline prices increased and the cost of other goods increased as well which lead to the largest annual gain in nearly six years. On Tuesday, the fairly strong report from the Labor Department suggested that a broad acceleration in wholesale price pressures, which could alleviate the concerns among some of the officials of Federal Reserve over persistently low inflation. The Labor Department stated that its producer price index for the final demand increased by 0.4 percent in the previous month and at the same time advancing by the same margin for three consecutive months.

In the 12 months through November, the producer price index rose up by 3.1 percent. That was the biggest gain since January 2012 and followed a 2.8 percent rise in the month of October. The economists had previously forecasted the producer price index rising by 0.3 percent in the previous month and increasing by 2.9 percent from a year ago. The key gauge that underlies the producer price pressures that excludes; food, trade services and energy has increased by 0.4 percent in the previous month. The so-called core producer price index had increased by 0.2 percent for two consecutive months. It increased by 2.4 percent in the 12 months through November. This is the largest gain since the series started in August 2014, after increasing by 2.3 percent in October.

The dollar advanced against a lot of other currencies on the data, while prices for Treasuries fell. The US The stock index of the United States futures was trading slightly higher. The big rise in the producer prices supports the views that weaken the inflation readings experienced through the first half of the year have probably run their course. Some of the Fed officials were in great worry that the factors that had held down inflation early in the year could become more persistent. Fed officials were all set to gather for a two day policy meeting.

The central bank of the United States is expected to increase the rates of interest on Wednesday, for a third time in this year, with a robust labor market and strengthening economy that is expected to overshadow earlier concerns of the policymakers about inflation. The central bank of the United States tracks personal consumption expenditures price index where food and energy are excluded, which has undershot the target of the Feds by 2 percent for nearly five and a half years.

January 16, 2022 - 03:03
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