US producer prices rise more than expected in November

US producer prices rose a little more than expected in November, but the underlying inflation trend is moderating, which may allow the Federal Reserve to ease its pace of interest rate hikes next week.

The producer price index for final demand rose 0.3% last month, the Labor Department said on Friday (9).

The October data was revised to show an increase of 0.3% for the index, from 0.2% reported previously. In the 12 months through November, producer prices accumulated an increase of 7.4%, from 8.1% in October.

Economists polled by Reuters had projected a rise of 0.2% on a monthly basis and 7.2% on an annual basis.

The data was released ahead of the Fed’s policy meeting next week. Fed Chair Jerome Powell said last month that the US central bank could slow the pace of interest rate hikes “as early as December”.

The Fed is promoting the fastest rate hike since the 1980s.

Inflation is gradually easing as supply chains improve and demand for goods weakens. The Institute of Supply Management reported last week that its measure of prices paid by factories for goods fell to a two-and-a-half-year low in November.

But the shift in spending towards services means that overall inflation will remain high for some time. Part of the pricing pressures come from the labor market, with wage growth accelerating in November.

That has led economists to project that the Fed will continue to tighten monetary policy, raising its interest rate above the recently projected 4.6%, where it could remain for some time.

The central bank raised the base rate by a total of 3.75 percentage points this year from close to zero to a range of 3.75%-4.00%.

Excluding volatile components, producer prices advanced 0.3% in November, after the core index rose 0.2% in October

In the 12 months through November, the core index increased by 4.9%, compared to 5.4% in October.