U.S. Wholesale Prices Rose in November by Most in Five Months

Wholesale prices in the U.S. rose in November by the most since June, as a pickup in profit margins at service providers more than offset cheaper costs of goods.

The producer-price index gained 0.3 percent after a 0.4 percent decrease the prior month, Labor Department figures showed Friday. The median forecast in a Bloomberg survey called for no change. Costs dropped 1.1 percent over the past 12 months after a 1.6 percent decline that was the biggest drop in comparable records back to 2010.

Goods prices declined for a fifth straight month, the report showed, reflecting waning global demand and a stronger dollar. Federal Reserve policy makers, who are projected to raise interest rates next week for the first time since 2006, have said low energy prices and a robust greenback are transitory influences on inflation.

“It’s still the story that inflation remains very well contained,” Russell Price, senior economist at Ameriprise Financial Inc. in Detroit, said before the report. “We may make some progress, but a higher rate of inflation will be difficult to achieve anytime soon. The Fed sees conditions as supportive of their view that inflation will eventually rise toward their desired goal.”

Prices paid for goods fell 0.1 percent in November after a

0.4 percent drop the prior month. In contrast, service prices jumped 0.5 percent, the most in more than a year. Almost 80 percent of that advance was due to higher margins received by wholesalers and retailers, the report showed.

Food prices advanced 0.3 percent, the report showed. Energy expenses dropped 0.6 percent, with gasoline decreasing 1.3 percent.

Wholesale prices excluding food and energy rose 0.3 percent following a 0.3 percent decline. Those costs were up 0.5 percent from November 2014.

Excluding food and energy and also eliminating trade services, producer costs climbed 0.1 percent after falling 0.1 percent in October. Some economists prefer this reading because it strips out the most volatile components of PPI.

The producer price gauge is one of three monthly inflation reports released by the Labor Department, the other two being import costs and consumer prices.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE