U.S. producer prices post biggest annual gain in nearly
six years
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[December 12, 2017]
WASHINGTON (Reuters) - U.S. producer prices
rose in November as gasoline prices surged and the cost of other goods
increased, leading to the largest annual gain in nearly six years and
pointing to a broad acceleration in wholesale inflation.
The Labor Department on Tuesday said its producer price index for final
demand increased 0.4 percent last month. The PPI has now increased by
the same margin for three straight months.
In the 12 months through November, the PPI shot up 3.1 percent. That was
the biggest gain since January 2012 and followed a 2.8 percent rise in
October. Economists polled by Reuters had forecast the PPI rising 0.3
percent last month and increasing 2.9 percent from a year ago.
The strong rise in the PPI supports views that weak inflation readings
experienced through the first half of the year have probably run their
course. The PPI report was released as Federal Reserve officials
prepared to gather for a two-day policy meeting.

Some policymakers had worried that the factors that had held down
inflation early in the year could become more persistent. The U.S.
central bank tracks the personal consumption expenditures (PCE) price
index excluding food and energy, which has undershot the Fed's 2 percent
target for nearly 5-1/2 years.
The Fed is expected to raise interest rates on Wednesday, for a third
time this year, with a robust labor market and strengthening economy
expected to overshadow policymakers' earlier concerns about tame
inflation.
Last month, gasoline prices surged 15.8 percent, the biggest gain since
August 2009, after dropping 4.6 percent in October. Gasoline accounted
for two thirds of the 1.0 percent increase in the final demand goods
index.
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Customers shop at a Whole Foods store in New York City, U.S., August
28, 2017. REUTERS/Brendan McDermid/File Photo

Wholesale food prices rose 0.3 percent in November after increasing 0.5 percent
in October. Prices for services increased 0.2 percent last month after
increasing 0.5 percent in October.
A key gauge of underlying producer price pressures that excludes food, energy
and trade services rose 0.4 percent last month. The so-called core PPI had
increased by 0.2 percent for two straight months.
It rose 2.4 percent in the 12 months through November, the largest gain since
the series started in August 2014. The core PPI increased 2.3 percent in the 12
months through October.
Core goods increased 0.3 percent in November, rising by the same margin for a
third consecutive month. Prices for passenger cars increased 0.5 percent last
month, the largest increase since December 2016, after being unchanged in
October.
The cost of healthcare services was unchanged last month after 0.3 percent in
October. Those costs feed into the core PCE price index.
(Reporting By Lucia Mutikani, Editing by Andrea Ricci; Lucia.Mutikani@thomsonreuters.com;
1 202 898 8315; Reuters Messaging: lucia.mutikani.thomsonreuters.
com@reuters.net)
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