US final demand prices for November fall back as expected

Wholesale inflation in the States fell back last month as goods and energy prices receded, but printed ahead of forecasts at the so-called 'core' level.

According to the Department of Labor, so-called final demand prices edged higher by 0.1% month-on-month in November (consensus: 0.0%) on the back of a 1.3% jump in food costs.

Versus October, goods prices fell by 0.4% while those for services were up by 0.3%.

Within the former, energy prices slumped by 5.0%.

In October, total final demand prices had gained 0.6%.

Excluding food and energy, final demand prices for goods advanced by 0.3% against the previous month, after a flat reading in October, alongside a similar increase in core services prices.

Versus a year ago, the rate of gains in total final demand prices slipped from 2.9% to 2.5% (consensus: 2.5%).

The year-on-year rate of gain in prices for final demand goods, less food, energy and trade was unchanged at 2.8% with prices higher by 0.3% on the month (consensus: 0.1%).

Despite the higher-than-expected readings on core prices, Ian Shepherdson at Pantheon Macroeconomics said: "Overall, though, core PPI inflation has peaked.

"Oil prices are a much more important determinant of PPI inflation than CPI or PCE, and the plunge in crude prices soon will start to work its way through production and distribution costs. Core PPI inflation, both goods and services, is set to slow sharply over the next six-to-nine months, with a big drop likely to start before the end of the winter."