U.S. wholesale inflation unexpectedly accelerated in November on a surge in egg prices, while other categories of goods experienced more moderate increases, suggesting a muted effect on the Federal Reserve’s preferred price gauge.

The producer price index (PPI) for final demand rose 0.4 percent from a month earlier—the most since June—according to a Bureau of Labor Statistics (BLS) report released Thursday. Details showed little change or outright declines in several key categories of services prices, which economists read as allaying some concerns over recent firming in broader inflation metrics.

The inflation data and filings for unemployment insurance, which showed an uptick in applications in the week after Thanksgiving, were among the last key indicators to be published before the Fed’s policy meeting next week. The U.S. central bank is widely expected to cut its benchmark rate for a third straight gathering and signal a slower pace of reductions in 2025.

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Thursday’s PPI report followed the more closely watched consumer price index, which showed Wednesday that underlying inflation remained firm for a fourth straight month. The string of hotter numbers comes after a rapid moderation earlier in 2024, and has added to uncertainty over the trajectory for prices and interest rates as the incoming Trump administration threatens higher tariffs on imported goods.

Still, economists pay close attention to the PPI report because several of its components feed into the Fed’s preferred inflation measure—the personal consumption expenditures (PCE) price index—and those were favorable across the board in November. Healthcare categories like hospitals, physician services, nursing home services, and home healthcare were little changed. Portfolio management services—a category that captures fees paid to investment advisers and generally tracks movements in the stock market—fell, along with airfares.

While the November PCE reading won’t be published by the time of the Fed’s policy meeting next week, central bankers will have a good idea of what it will show based on the CPI and PPI reports. Following the release of the PPI data, economists at Bank of America said they expect the PCE report to show a 0.1 percent rise, which would mark the smallest increase in six months. “If our forecast proves correct, it would be a relief and leave us less worried about the recent trajectory of inflation. Moreover, it increases our conviction that the Fed will cut next week,” they said in a note. “That said, the outlook beyond that remains murky. Progress on inflation has stalled of late, and there are upside risks to inflation on the horizon.”

Separate figures showed first-time applications for jobless benefits increased last week to a two-month high. Continuing claims, a proxy for the number of people receiving benefits, rose in the week that included the Thanksgiving holiday.

The PPI data showed goods prices jumped 0.7 percent, the most since February. The BLS said more than 80 percent of this advance was traced to food. Egg prices surged 55 percent from a month earlier. Production of the breakfast staple has been constrained by an influenza outbreak at a time when demand has been on the rise. Farmers have culled more than 33 million egg layers and pullets to stop the spread of the highly pathogenic virus—twice as many as in 2023—keeping a lid on output.

The PPI report also revealed a 33 percent surge in prices of fresh and dry vegetables in November from a month earlier, while fresh fruit and melon prices jumped 22 percent. Overall, food prices rose by 3.1 percent, the most in two years.

Services costs in the PPI report edged up 0.2 percent, the least in four months. Goods prices, excluding food and energy, rose by a similar amount.


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