American wholesale prices up 9.6% over last year, sets new inflation record

Since this time one year ago, prices at the wholesale level shot up a staggering 9.6 percent, which is an indication of continuing inflation pressures.

On Tuesday, the Labor Department said that the producer price index, that measures inflation before it reaches consumers, rose 0.8 percent in November. The new number reflected the highest monthly reading of the producer price index in four months.

Even though food prices had fallen 0.3 percent in October, they jumped back up 1.2 percent in November. Energy prices increased 2.6 percent after a steep 5.3 percent rise in October. The one-year increase in wholesale inflation of 9.6 percent set a new record, passing the previous records for 12-month increases of 8.6 percent, which were set in both September and October.

Records on wholesale prices date back to the year 2010. Core inflation at the level of wholesale, prices which exclude volatile food and energy, were up 9.5 percent over the past twelve months, showing a 0.8 percent increase in November. The increase was spread out over more than one category, led by a 1.2 percent hike in the cost of goods and a 0.7 percent uptick in the price of services.

The Federal Reserve is holding its last meeting of the year this week and is expected to announce on Wednesday that the pace at which the Reserve reduces monthly bond purchases will be accelerated. This move will prepare the way for the group to begin raising its benchmark interest rate in the attempt to bring inflation under control.

Senior economist at Oxford Economics, Mahir Rasheed, said he expects wholesale prices to peak in the current quarter, but his prediction may be too optimistic with the supply chain crisis. “Persistent supply headwinds will keep input and transportation costs sticky and only allow for a gradual moderation in price pressures,” he said. 




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