Inflation in the U.S has eased enough that the Federal Reserve announced Wednesday not only is it leaving interest rates where they are for now, that after 11 rate hikes since March 2022 they might actually start cutting them next year.
The U.S. Labor Department said Wednesday its producer price index — the statistic it uses to track inflation before it hits consumers — was flat from October to November after having fallen 0.4% the month before. Measured year over year, producer prices rose just 0.9% from November 2022, the smallest such rise since June, the Associated Press reported.
Not counting food and energy costs, so-called core wholesale prices were unchanged from October and were up just 2% from a year ago — the mildest year-over-year increase since January 2021, the AP reported. Among goods, prices were unchanged from October to November, held down by a 4.1% drop in gasoline prices. https://a72eb0028eb9560d9a3ff104c893e3dd.safeframe.googlesyndication.com/safeframe/1-0-40/html/container.html Wednesday’s report reinforced the belief that inflation pressures are cooling across the economy, including among wholesale producers. The figures , which reflect prices charged by manufacturers, farmers and wholesalers, can provide an early sign of how fast consumer inflation will rise in the coming months.
Year-over-year producer price inflation has slowed fairly steadily since peaking at 11.7% in March 2022, when the Fed began raising its benchmark interest rate to try to slow accelerating prices. Since then, the Fed has raised the rate 11 times, from near zero to about 5.4%, the highest level in 22 years.
The Labor Department reported Tuesday that consumer prices rose just 0.1% last month from October and 3.1% from a year earlier. But core prices, which the Fed sees as a better indicator of future inflation, were stickier, rising 0.3% from October and 4% from November 2022. Year-over-year consumer price inflation is down sharply from a four-decade high of 9.1% in June 2022 but is still above the Fed’s 2% target.
“The data confirm the downtrend in inflation, although consumer prices are moving lower more gradually,″ Rubeela Farooqi, chief U.S. economist at High Frequency Economics, told the AP. “For the Fed, there is nothing in today’s figures that changes our expectation that (its policymakers) will hold policy steady today, and rates are at a peak.”
