Producer Prices Surge Higher In November Amid Jump In Energy Prices

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Producer prices increased by much more than expected in the month of November, according to a report released by the Labor Department on Tuesday, with the price growth due in large part to a substantial jump in energy prices.

The Labor Department said its producer price index rose 1.8 percent in November following an unrevised 0.3 percent increase in October. Economists had been expecting a much more modest increase in prices of about 0.8 percent.

A jump in energy prices contributed to the bigger than expected increase, with energy prices surging up by 6.9 percent in November after increasing by 1.6 percent in October.

The increase in energy prices was largely due to a 14.2 percent increase in gasoline prices, which accounted for about sixty percent of the energy price growth. Still, the Labor Department said higher prices for liquefied petroleum gas and home heating oil also were major factors.

With the monthly increase, producer prices rose at an annual rate of 2.4 percent in November compared to a 1.9 percent year-over-year decline in October. This marked the first annual rate of price growth since a 0.4 percent increase in November of 2008.

Despite the surge in prices in November, Paul Dales, U.S. economist at Capital Economics, said, "The sharp jump in U.S. producer prices is NOT the first real sign that the Fed's accommodative policies are stoking inflation."

While Dales acknowledged that the monthly increase and the turnaround in the annual rate are "certainly eye-catching," he noted that both are largely to due to temporary energy effects.

Core producer prices, which exclude food and energy prices, increased by 0.5 percent in November following an unrevised 0.6 percent decrease in the previous month. The increase in core prices exceeded economist estimates of a 0.2 percent increase.

The Labor Department said that the increase in core prices reflected a 4.2 percent increase in prices for light motor trucks as well as higher cigarette prices.

On an annual basis, core producer prices were up 1.2 percent in November compared to the same month a year ago, an acceleration from the 0.7 percent annual rate of growth seen in October.

Producer prices increased by much more than expected in the month of November, according to a report released by the Labor Department on Tuesday, with the price growth due in large part to a substantial jump in energy prices. The Labor Department said its producer price index rose 1.8 percent in November following an unrevised 0.3 percent increase in October. Economists had been expecting a much more modest increase in prices of about 0.8 percent. (Market News Provided by RTTNews)