“…annual gains were registered in all categories, suggesting many manufacturers are taking advantage of the recent pick-up in growth to pass on at least some of their higher energy bills.
Core producer output price inflation, which strips out food, beverages, tobacco and petroleum products, rose by an annual 3.6 percent, its highest rate since February 2009.”
When including energy and food prices, producer prices soared twice as high as expectations to 0.9%. The annualized increase of 5.0% has not been this high since November, 2008.
The Bank of England is betting that inflationary pressures will subside later in the year given spare capacity in the economy. Skeptics are growing…
“Prices at the wholesale level rose across-the-board in November setting off a new debate over whether the recovering economy is starting to generate inflation pressures. Higher energy costs pushed the U.S. producer price index to surge 1.8% in November, the Labor Department reported Tuesday — a rate that far exceeded analysts’ expectations.”
The core PPI was up 0.5% — also higher than expected.
Most of the increase in overall PPI was due to higher energy costs. Since energy costs have declined in the last two weeks, don’t expect to see another big jump in producer prices next month.