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U.S. PPI accelerated unexpectedly in November, frustrating hopes for quick pivot

Economic Indicators Dec 09, 2022 08:42AM ET
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By Geoffrey Smith

Investing.com -- U.S. producer prices rose faster than expected in November, in another sign that inflation isn't coming down as fast as the Federal Reserve would like.

The producer price index rose by 0.3% from October, more than the 0.2% consensus, and October's number was also revised up to 0.3% from 0.2%. The picture was flattered by volatile food and energy prices: without those two elements, the 'core' producer price index rose 0.4%, the most since June.

That left the core year-on-year rate of factory gate inflation at 6.2%. While that's the lowest reading in over a year, the result of big increases in energy prices last year passing out of the equation, analysts had forecast a steeper decline to 5.9%. More recent developments in energy markets also helped, with gasoline prices down 6.0% on the month.

The headline annual PPI rate similarly declined only to 7.4% from an upwardly revised 8.1% in October. Analysts had forecast a slowdown to 7.2%.

Analysts said the broad trend of disinflation in traded goods was still intact, however. In year-on-year terms, all of the main sectors of the index are falling with the exception of wholesale food prices, tweeted Charles Schwab's chief fixed income strategist Kathy Jones.

The Bureau of Labor Statistics said that most of the impulse for November's data came from final demand services, with financial services accounting for one-third of the total gain in services prices. It noted that service providers' profit margins expanded by 0.7 percentage points, fresh evidence that corporate pricing power has contributed largely to overall inflation this year, besides the better-documented narratives of higher energy and labor costs.

U.S. stock futures reacted negatively to the news, which was seen as making it harder for the Federal Reserve to slow and then stop this year's sequence of interest rate increases. After a strong labor market report for November, market participants expect the Fed will have to raise rates above 5% to bring inflation down decisively.

By 09:05 ET (14:05 GMT), Dow Jones Futures had reversed overnight gains to trade down 95 points, or 0.3%, while S&P 500 Futures and Nasdaq 100 Futures were down by fractionally more. However, the bond and currency markets were more relaxed, with Treasury yields staying broadly flat and the Dollar Index gaining less than 0.3% to trade at 104.82, flat on the day.

U.S. PPI accelerated unexpectedly in November, frustrating hopes for quick pivot
 

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Comments (32)
Dave Jones
Dave Jones Dec 10, 2022 3:42AM ET
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pivot lol
Hank Williams
Hank Williams Dec 09, 2022 2:09PM ET
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This inflation has an eerie similarity to 2007 and Oil could pop anytime.
First Last
First Last Dec 09, 2022 2:09PM ET
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The GFC was caused by bad/under-regulations, not war.
First Last
First Last Dec 09, 2022 2:09PM ET
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Inflation rate peaked in mid-2008 and went negative in 2009
Ronald Warren
Ronald Warren Dec 09, 2022 12:18PM ET
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Comforting green market in the face of a .75 possibly 1.00 rate hike next week. If you don't buy puts at days end, you're living in the ozone.
Kerry Ditto
Kerry Ditto Dec 09, 2022 11:06AM ET
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mkt should get patient and rejoice X-mas Patient PIVOT RALLY.
John Berry
John Berry Dec 09, 2022 10:58AM ET
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And the market is green. Scam
Kerry Ditto
Kerry Ditto Dec 09, 2022 10:57AM ET
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stock mkt is flat on lowest core ppi in a year. maybe even God is impatient and greedy sometimes.
First Last
First Last Dec 09, 2022 10:57AM ET
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Back to green
Bill Powers
Bill Powers Dec 09, 2022 10:57AM ET
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First Last back to red
Tru Gfu
Tru Gfu Dec 09, 2022 10:42AM ET
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what does flattered even mean in this context? horrible writing and no editing at all?
First Last
First Last Dec 09, 2022 10:42AM ET
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The producer price index was made to look better, less high, by volatilefood and energy prices that didn't rise as much.
Scott Allen
Scott Allen Dec 09, 2022 10:29AM ET
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There was literally NEVER case for a "quicker pivot." That is literally the most braindead nonsense.
Angus Malarkey
Angus Malarkey Dec 09, 2022 10:29AM ET
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The "case" that continues to exist is that the economy is in recession and has been all of 2022, regardless of the phony numbers released just before midterm elections. A global DEPRESSION coupled with very high inflation will arrive sooner than most are prepared for.
First Last
First Last Dec 09, 2022 10:29AM ET
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Angus Malarkey   Is the "we're were already in a recession" thing making it's rounds again?  When do we re-start whining about Biden re-defining "recession"?  The midterm elections are over.  Are we preparing for the Nov 2024 election so soon?
Kerry Ditto
Kerry Ditto Dec 09, 2022 10:27AM ET
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impatience usually costs. sometimes dearly.
Kerry Ditto
Kerry Ditto Dec 09, 2022 10:26AM ET
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core ppi 6.2%, the lowest reading in over a year. some people are impatient. let's be careful of being impatient. patience normally pays.
 
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