Economic data released on Wednesday, January 14th showed that the wholesale price increase in the United States in November was lower than economists’ expectations, while consumers continued to show strong buying momentum.
According to the seasonally adjusted data released by the US Bureau of Labor Statistics (BLS) on Wednesday, the Producer Price Index (PPI) measuring wholesale prices only rose by 0.2% in November compared to the previous month, which was lower than the economists’ general expectation of 0.3% increase as surveyed by Dow Jones & Company. However, it was still 0.1 percentage points higher than the data from October.
Excluding the volatile food and energy prices, the core PPI remained flat on a month-to-month basis, falling below the expected 0.2% increase.
However, the BLS data also indicated that despite the monthly data being better than expected, the overall PPI compared to the same period last year still increased by 3%, significantly higher than the Federal Reserve’s 2% inflation target. The core PPI, excluding trade services, saw a year-on-year increase of 3.5%, marking the largest increase since March 2025.
The prices of goods increased by 0.9% in November, with energy prices rising by 4.6% accounting for over 80% of the increase. However, service prices remained unchanged from the previous month.
The PPI serves as a potential indicator of the future retail price inflation rate for the coming months. It measures the costs that producers of goods and services pay for their products, rather than what consumers pay. Yet, it indicates potential changes in store prices, making it a good leading indicator of inflation pressures. The core PPI is considered a better predictive indicator.
The PPI data itself has little impact on the decisions of the Federal Reserve policymakers, but some PPI data will be included in the calculation formula of the Personal Consumption Expenditures (PCE) price index, which is the Fed’s official inflation gauge.
At the same time as the release of the PPI data by the Labor Department, the Consumer Census Bureau of the US Commerce Department reported that the retail sales in November grew by 0.6% compared to the previous month, after seasonal adjustments but without inflation adjustments. Economists surveyed by Dow Jones had previously expected an increase of 0.4%. Excluding auto sales, retail sales for the month increased by 0.5%, surpassing the expected 0.3% increase.
The growth in retail sales in November covered a wide range of sectors, including car and auto parts dealerships, building materials and garden centers, gas stations, sports goods stores, and other miscellaneous retail stores, all showing sales growth of over 1%.
Compared to the same period last year, retail sales in November increased by 3.3%, exceeding the 2.7% increase in the Consumer Price Index (CPI) for the same month.