A November Surge in Energy Prices Pushes Up Producer Price Inflation

Inflation was mild outside of an increase in energy prices in November, a key gauge of prices showed Wednesday.

The producer price index for final demand, which measures prices paid to U.S. producers of goods and services, rose by 0.2 percent in November, the Labor Department said Thursday. This was below analyst estimates for a 0.3 percent increase.

In September, the producer price index rose 0.6 percent. In October it rose by just 0.1 percent. The report for November was delayed by the government shutdown.

Excluding energy, however, producer prices were unchanged in November.

Services prices were unchanged in the month, contributing to the zero inflation figure outside of energy. Food prices were also unchanged.

Excluding food and energy, goods prices rose 0.2 percent. Prices of durable consumer goods rose 0.3 percent and prices of nondurable goods excluding energy rose 0.2 percent.

Trade services, a measure of markups at retailers and wholesalers, fell by 0.8 percent. The index of margins for sellers of consumer goods fell by a sharp 1.6 percent.

Excluding trade services, energy, and food, producer prices rose 0.2 percent. This measure is often refered to as “super core” inflation.

Over the 12 months through November, the producer price index is up three percent. Excluding trade services, energy, and food, prices rose 3.5 percent.

The producer price index measures prices paid to U.S. producers of goods and services. It is not a measure of wholesale prices, although it is often referred to as a wholesale price index. The headline numbers come from the index for final demand, which are based on prices of goods sold to households for personal consumption, foreign consumers, governments, and to businesses as capital investments.

The producer price index also measures prices paid for intermediate goods and services, which are products sold to businesses as inputs to production and construction, excluding capital investment. Prices for processed goods for intermediate demand rose 0.6 percent in November. Energy prices, which climbed three percent, were responsible for most of that increase. Excluding food and energy, intermediate goods prices ticked up 0.1 percent.

Prices for raw goods rose 0.4 percent, the first increase since July. A major factor in the price of unprocessed goods was an 8.2 percent rise in the price of corn. The index for crude oil, natural gas, raw milk, and copper declined. Excluding food and energy, prices of raw goods rose by 0.1 percent.